HRS §490:9-628
When a secured party is not liable for mistakes
This section protects a secured party (like a lender) from being sued for not following the rules if it did not know who the debtor or obligor was or how to contact them. It also protects the secured party when it reasonably believed a transaction was not a consumer deal. The protection does not apply in certain cases involving digital collateral.
debtors
The statute, as written — Nonliability and limitation on liability of secured party; liability of secondary obligor
(a) Subject to subsection (f), unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person: (1) The secured party shall not be liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this article; and (2) The secured party's failure to comply with this article shall not affect the liability of the person for a deficiency. (b) Subject to subsection (f), a secured party shall not be liable because of its status as secured party to: (1) A person that is a debtor or obligor, unless the secured party knows: (A) That the person is a debtor or obligor; (B) The identity of the person; and (C) How to communicate with the person; or (2) A secured party or lienholder that has filed a financing statement against a person, unless the secured party knows: (A) That the person is a debtor; and (B) The identity of the person. (c) A secured party shall not be liable to any person, and a person's liability for a deficiency shall not be affected, because of any act or omission arising out of the secured party's reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party's belief is based on its reasonable reliance on: (1) A debtor's representation concerning the purpose for which collateral was to be used, acquired, or held; or (2) An obligor's representation concerning the purpose for which a secured obligation was incurred. (d) A secured party shall not be liable to any person under section 490:9-625(c)(2) for its failure to comply with section 490:9-616. (e) A secured party shall not be liable under section 490:9-625(c)(2) more than once with respect to any one secured obligation. (f) Subsections (a) and (b) shall not apply to limit the liability of a secured party to a person if, at the time the secured party obtains control of collateral that is a controllable account, controllable electronic record, or controllable payment intangible or at the time the security interest attaches to the collateral, whichever is later: (1) The person is a debtor or obligor; and (2) The secured party knows that the information in subsection (b)(1) relating to the person is not provided by the collateral; a record attached to, or logically associated with, the collateral; or the system in which the collateral is recorded.
Sections this one refers to
§490:9-625 What happens when a secured party breaks the rules
LawTrove is not legal advice. The summary above is a computer-generated restatement — the authoritative text is the official version linked above.