Section 9--313. When Possession by or Delivery to Secured Party Perfects

Security Interest Without Filing.

(a) Perfection by possession or delivery. Except as otherwise provided
in subsection (b), a secured party may perfect a security interest in
tangible negotiable documents, goods, instruments, money, or tangible
chattel paper by taking possession of the collateral. A secured party
may perfect a security interest in certificated securities by taking
delivery of the certificated securities under Section 8--301.

(b) Goods covered by certificate of title. With respect to goods
covered by a certificate of title issued by this state, a secured party
may perfect a security interest in the goods by taking possession of the
goods only in the circumstances described in Section 9--316(d).

(c) Collateral in possession of person other than debtor. With respect
to collateral other than certificated securities and goods covered by a
document, a secured party takes possession of collateral in the
possession of a person other than the debtor, the secured party, or a
lessee of the collateral from the debtor in the ordinary course of the
debtor's business, when:

(1) the person in possession authenticates a record acknowledging

that it holds possession of the collateral for the secured

party's benefit; or

(2) the person takes possession of the collateral after having

authenticated a record acknowledging that it will hold

possession of collateral for the secured party's benefit.

(d) Time of perfection by possession; continuation of perfection. If
perfection of a security interest depends upon possession of the
collateral by a secured party, perfection occurs no earlier than the
time the secured party takes possession and continues only while the
secured party retains possession.

(e) Time of perfection by delivery; continuation of perfection. A
security interest in a certificated security in registered form is
perfected by delivery when delivery of the certificated security occurs
under Section 8--301 and remains perfected by delivery until the debtor
obtains possession of the security certificate.

(f) Acknowledgment not required. A person in possession of collateral
is not required to acknowledge that it holds possession for a secured
party's benefit.

(g) Effectiveness of acknowledgment; no duties or confirmation. If a
person acknowledges that it holds possession for the secured party's
benefit:

(1) the acknowledgment is effective under subsection (c) or

Section 8--301(a), even if the acknowledgment violates the

rights of a debtor; and

(2) unless the person otherwise agrees or law other than this

article otherwise provides, the person does not owe any duty

to the secured party and is not required to confirm the

acknowledgment to another person.

(h) Secured party's delivery to person other than debtor. A secured
party having possession of collateral does not relinquish possession by
delivering the collateral to a person other than the debtor or a lessee
of the collateral from the debtor in the ordinary course of the debtor's
business if the person was instructed before the delivery or is
instructed contemporaneously with the delivery:

(1) to hold possession of the collateral for the secured party's

benefit; or

(2) to redeliver the collateral to the secured party.

(i) Effect of delivery under subsection (h); no duties or
confirmation. A secured party does not relinquish possession, even if a
delivery under subsection (h) violates the rights of a debtor. A person
to which collateral is delivered under subsection (h) does not owe any
duty to the secured party and is not required to confirm the delivery to
another person unless the person otherwise agrees or law other than this
article otherwise provides.

(j) Cooperative interests. Subsections (a) through (i) do not apply to
cooperative interests.