N.D. Cent. Code § 6-08.6-01 Definitions
6-08.6-01. Definitions
In this chapter:
1. "Account agreement" means an agreement that:
a. Is in a record between a bank or credit union and one or more depositors;
b. May have one or more beneficiaries as additional parties; and
c. States the intention of the parties to establish a special deposit in accordance
with this chapter.
2. "Bank" means a trust company or a person engaged in the business of banking as
defined in section 6-01-02.
3. "Beneficiary" means a person that:
a. Is identified as a beneficiary in an account agreement; or
b. If not identified as a beneficiary in an account agreement, may be entitled to
payment from a special deposit:
(1) Under the account agreement; or
(2) On termination of the special deposit.
4. "Contingency" means an event or circumstance stated in an account agreement which
is not certain to occur but must occur before the bank or credit union is obligated to
pay a beneficiary.
5. "Creditor process" means attachment, garnishment, levy, notice of lien, sequestration,
or similar process issued by or on behalf of a creditor or other claimant.
6. "Depositor" means a person that establishes or funds a special deposit.
7. "Good faith" means honesty in fact and observance of reasonable commercial
standards of fair dealing.
8. "Knowledge" of a fact means:
a. With respect to a beneficiary, actual knowledge of the fact; or
b. With respect to a bank or credit union holding a special deposit:
(1) If the bank or credit union:
(a) Has established a reasonable routine for communicating material
information to an individual to whom the bank or credit union has
assigned responsibility for the special deposit; and
(b) Maintains reasonable compliance with the routine, actual knowledge
of the fact by that individual; or
(2) If the bank or credit union has not established and maintained reasonable
compliance with a routine described in paragraph 1 or otherwise exercised
due diligence, implied knowledge of the fact that would have come to the
attention of an individual to whom the bank or credit union has assigned
responsibility for the special deposit.
9. "Obligated to pay a beneficiary" or "obligation to pay a beneficiary" means a
beneficiary is entitled under the account agreement to receive from the bank or credit
union a payment when:
a. A contingency has occurred; and
b. The bank or credit union has knowledge the contingency has occurred.
10. "Permissible purpose" means a governmental, regulatory, commercial, charitable, or
testamentary objective of the parties stated in an account agreement. The term
includes an objective to:
a. Hold funds:
(1) In escrow, including for a purchase and sale, lease, buyback, or other
transaction;
(2) As a security deposit of a tenant;
(3) That may be distributed to a person as remuneration, retirement or other
benefit, or compensation under a judgment, consent decree, court order, or
other decision of a tribunal; or
(4) For distribution to a defined class of persons after identification of the class
members and their interest in the funds;
b. Provide assurance with respect to an obligation created by contract, including
earnest money to ensure a transaction closes;
c. Settle an obligation that arises in the operation of a payment system, securities
settlement system, or other financial market infrastructure;
d. Provide assurance with respect to an obligation that arises in the operation of a
payment system, securities settlement system, or other financial market
infrastructure; or
e. Hold margin, other cash collateral, or funds that support the orderly functioning of
financial market infrastructure or the performance of an obligation with respect to
the infrastructure.
11. "Person" means an individual, estate, business or nonprofit entity, government or
governmental subdivision, agency, or instrumentality, or other legal entity. The term
includes a protected series, however denominated, of an entity if the protected series
is established under law that limits, or limits if conditions specified under law are
satisfied, the ability of a creditor of the entity or of any other protected series of the
entity to satisfy a claim from assets of the protected series.
12. "Record" means information:
a. Inscribed on a tangible medium; or
b. Stored in an electronic or other medium and retrievable in perceivable form.
13. "Special deposit" means a deposit that satisfies section 6-08.6-04.
14. "State" means a state of the United States, the District of Columbia, Puerto Rico, the
United States Virgin Islands, or any other territory or possession subject to the
jurisdiction of the United States. The term includes an agency or instrumentality of the
state.