BILL NUMBER: AB 185	CHAPTERED
	BILL TEXT

	CHAPTER   62
	FILED WITH SECRETARY OF STATE   JUNE 5, 1998
	APPROVED BY GOVERNOR   JUNE 4, 1998
	PASSED THE ASSEMBLY   MAY 26, 1998
	PASSED THE SENATE   MAY 21, 1998
	AMENDED IN SENATE   MAY 14, 1998
	AMENDED IN SENATE   MARCH 17, 1998
	AMENDED IN ASSEMBLY   AUGUST 29, 1997
	AMENDED IN ASSEMBLY   AUGUST 25, 1997

INTRODUCED BY   Assembly Member Papan

                        JANUARY 29, 1997

   An act to add Section 1663 to the Civil Code, relating to
contracts, and declaring the urgency thereof, to take effect
immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 185, Papan.  Interpretation of contracts:  European currency.
   Existing law sets forth various specified rules governing the
interpretation of contracts.
   This bill would provide for the interpretation of contracts,
securities, and similar instruments with relation to mediums of
payment replaced by the euro.
   The bill would declare that it is to take effect immediately as an
urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 1663 is added to the Civil Code, to read:
   1663.  (a) As used in this section, the following terms shall have
the following meanings:
   (1) "Euro" means the currency of participating member states of
the European Union that adopt a single currency in accordance with
the Treaty on European Union signed February 7, 1992, as amended from
time to time.
   (2) "Introduction of the euro" includes, but is not limited to,
the implementation from time to time of economic and monetary union
in member states of the European Union in accordance with the Treaty
on European Union signed February 7, 1992, as amended from time to
time.
   (3) "ECU" or "European Currency Unit" means the currency basket
that is from time to time used as the unit of account of the European
community, as defined in European Council Regulation No. 3320/94.
   (b) If a subject or medium of payment of a contract, security, or
instrument is the ECU or a currency that has been substituted or
replaced by the euro, the euro shall be a commercially reasonable
substitute and substantial equivalent that may be either tendered or
used in determining the value of the ECU or currency, in each case at
the conversion rate specified in, and otherwise calculated in
accordance with, the regulations adopted by the Council of the
European Union.
   (c) The introduction of the euro, the tendering of euros in
connection with any obligation in compliance with subdivision (b),
the determining of the value of any obligation in compliance with
subdivision (b), or the calculating or determining of the subject or
medium of payment of a contract, security, or instrument with
reference to an interest rate or other basis that has been
substituted or replaced due to the introduction of the euro and that
is a commercially reasonable substitute and substantial equivalent,
shall neither have the effect of discharging or excusing performance
under any contract, security, or instrument, nor give a party the
right unilaterally to alter or terminate any contract, security, or
instrument.
   (d) This section shall be subject to any agreements between
parties with specific reference to, or agreement regarding, the
introduction of the euro.
   (e) Notwithstanding the Commercial Code or any other law of this
state, this section shall apply to all contracts, securities, and
instruments, including contracts with respect to commercial
transactions, and shall not be deemed to be displaced by any other
law of this state.
   (f) In the event of other currency changes, the provisions of this
section with respect to the euro shall not be interpreted as
creating any negative inference or negative presumption regarding the
validity or enforceability of contracts, securities, or instruments
denominated in whole or part in those other currencies.
  SEC. 2.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   On January 1, 1999, the euro, the proposed currency of the
European Union, is scheduled to become the currency of the member
nations and their individual currencies will cease to exist.
International contracts that are expressed in terms of existing
national currencies must not become unenforceable or their
enforcement delayed because of an assertion of a defense that the
designated currencies no longer exist.  For these reasons, the
amendments to contract law made by this act are required to take
effect immediately in order to assure continuity of contract.