UNIFORM COMMERCIAL CODE

History and Evolution of the Uniform Commercial Code

Uniform Commercial Code

Introduction

The UCC drafted by National Conference of Commissioners on Uniform State Laws and the American Law Institute. Each State revised the model UCC and adopted its own code own business. Some states adopted the UCC model as written, while others made their own changes. The UCC is divided into articles, as follows:

History and Review

As has been true for each of the last few years now, the most significant activity involving the Uniform Commercial Code (U.c.c. or "Code") last year was in the legislative arena. Three specific matters are worthy of note.

First, by the end of June and after a flurry of activity, aU fifty states and the District of Columbia had enacted revised Article 9. I This was an amazing success for the drafters, the sponsoring organizations, and the state bar committees which pressed for enactment, and for the state legislatures themselves. It also avoided some extremely complex choice-of-law problems that might have arisen if the revisions went into effect only in some states.

Consumers protected by a requirement that the chosen jurisdiction bear a reasonable relation to the transaction and by a new rule that prevents the choice from depriving the consumer of an otherwise applicable consumer protection statute that cannot be varied by agreement. Another significant change is to the definition of obedient faith, which augmented from mere "honesty in fact," to also require "observance of reasonable commercial standards of fair dealing."

This change may be more significant than is commonly believed. While the recent revisions to Articles 3, 4, 4A, 8, and 9 already enhanced the definition of "good faith" in those articles in this manner,6only the change to Article 8 expressly made that enhancement applicable to the general duty of good faith imposed by Article 1 (in connection with Article 8 transactions).

The revisions to Article 9 attempted to do this by Comments but technically the definition there-as well as in Articles 3, 4, and 4A-applies only to the phrase "good faith" when used in the text of that article.9 Thus, a strict reading of the Code as currently enacted would indicate that the standard of mere honesty in fact, applies to most contractual and legal duties arising in transactions governed by Articles 3 and 4.

Thesis Statement

Business transactions often occur beyond the state borders. For example, goods can be manufactured in a state, then distributed and sold to a customer in a third state. Banking and credit transactions commonly occur between financial institutions in one state and customers located in another state.

Article 1: General provisions (such as definitions and rules of interpretation)

Article 2: sales (sale of goods)

Article 2A: leases (leases of goods)

Article 3: Captions (bank notes and letters)

Article 4: Bank Deposits

Article 4 A: Funds Transfer (transfer of money between banks)

Article 5: Letters of Credit

Article 6: Bulk Transfers and Bulk Sales

Article 7: Warehouse Receipts, bills of lading and other documents of title

Article 8: Investment Securities

Article 9: Secured Transactions

Definition

The Uniform Commercial Code of the United States (Uniform Commercial Code ...