Uniform Commercial Code: Everything You Need to Know
The Uniform Commercial Code (UCC) governs business transactions. It is a set of laws that standardize U.S. business law so that it is uniform in every state.3 min read
The Uniform Commercial Code (UCC) governs business transactions. It is a set of laws that standardize U.S. business law so that it is uniform in every state.
The UCC was enacted in 1952 and has had many revisions over the years. While it was not mandatory for every state, all 50 states have adopted it. It applies to all entrepreneurs and small businesses and covers situations such as recording, legalizing, and administering contracts. It also covers commercial transactions such as sales, leases, bank deposits, title documents, investment securities, and related items.
What the UCC Does
The UCC addressed two business-related problems in the U.S.: the complicated legal requirements of transacting business and the vast differences in laws among the states that made doing business in other states difficult. The UCC makes sure all states comply with the same business laws, although there might be some local variations.
Some of the UCC's goals include:
- Filling missing provisions in contracts with UCC guidelines.
- Enforcing uniform, streamlined treatment of check processing and other related transactions.
- Minimizing legal formalities in business contracts, thereby reducing the need for attorney intervention.
- Making transactions between merchants and consumers more efficient.
The National Conference of Commissioners on Uniform State Laws and the American Law Institute review the UCC periodically. They include any official comments and cross-references from earlier versions, which are also used in the creation of state laws regarding business transactions.
The UCC has eliminated some of the ambiguities and variations between states' laws. One important requirement of the UCC is that any contract regarding the purchase of goods worth $500 or more needs to be in writing to be legally binding.
The central filing office for documents and statements is called the UCC Section. There, all documents regarding compliance are reviewed and either approved or rejected. Accepted documents are then recorded and filed. Upon request, the public can access them.
Because the UCC is reviewed and revised, research must be conducted. Sources for this research include the UCC code, comments, commentaries of the Permanent Editorial Board and state judicial opinions, where the code is interpreted and applied. The official comments are second only to the code itself when it comes to constructing sections of the UCC.
In 1990, the PEB Commentary was introduced to resolve some ambiguities and issues raised by the Official Comments and the UCC. It resolves differences of opinion between scholars and legal judgments and clarifies the role of the UCC alongside other statutes.
Legal Source Materials for the UCC
Litigation under the UCC occurs on both a federal and state level. This includes bankruptcy courts, as well. Therefore, there is a substantial body of case law for the UCC to draw upon.
Locations where primary source materials might be found include:
- Duke University's Goodson Law Library, which holds several publications containing official UCC text, comments, and commentaries.
- Westlaw, which has the UCC text, including its comments, along with PEB commentaries, in its UCC-TEXT database.
- Lexis Advance, which has an extensive database that includes the Official Text and Comments of the UCC.
- Bloomberg Law, which provides the current UCC text and commentary.
- Uniform Laws Annotated, a multi-volume series that contains the most extensive information on the code, including text, comments, commentaries, and cross-references as well as state variations, law review article citations, and case digests.
Interpreting the UCC
The UCC's individual sections, which include the specific rules, are not always easy to comprehend. It helps to read the Official Comment for the section, which will probably be written in plain language with examples that serve to explain the rule. Therefore, this is where you should look if you are confused.
The commercial code of each specific state is based on the UCC. If you are trying to interpret the code for your state, it helps to search for the Official Comment related to that section of the UCC for further information and clarification.
Although it's not difficult to find the model UCC and your state's commercial code online at no charge, it might take extra work to find the Official Comment for the specific section you need.
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