In the US, each state has the power to enact its own legislation and the authority given to the federal government for enacting statewide legislation are limited to the ones empowered through its constitution. Thus, there was a need to harmonize the laws governing certain inter-state dealings. This requirement gave rise to the establishment of the U.S. Uniform Law Commission under the sponsorship of the Laws. Once formulated, the Uniform Acts become the template for adaption with or without alterations for a particular state. Uniform Commercial Code (UCC) is one such Uniform Act adapted by all the states and perhaps is the most important and the oldest of the lot.
History of the Uniform Commercial Code (UCC)
The Uniform Commercial Code was first drafted in the year 1942 and amendments were made to the same at different times depending on the national needs. Its main aim was to harmonize the law of sales and other commercial transactions in all 50 states within the United State of America. Having such a uniform law allows transactions to take place smoothly among different states without any legal barriers, which may have existed if different laws have been adapted by each state, to deal with similar legal issues. In addition to its main goal, the UCC also contributes to the modernization of the contract law as well as to the making of exceptions during contract formation. In addition, with the latest amendments to the UCC, it can be thought of as addressing the increasing needs of electronic transactions taking place within and between states.
Areas covered by the UCC
When looking at the general structure of the UCC, it is possible for anyone to understand the areas, which are covered by the same. In its general provisions, the UCC provides the definitions and the rules of interpretation, much in the same way as any other Act. Article 2 of the UCC provides for laws proposed for governing sales of goods. Article 2A proposes the laws for ‘leases of goods’ while the Article 3 provides for ‘negotiable instrument’ such as promissory notes and drafts. The Article on bank deposits (Article 4) covers the ‘banks and banking’ as well as the ‘check collection process’ while article 4A provides for ‘transfers of money between banks’. Article 5 is important as it provides for ‘letters of credit’ while Article 6 covers ‘auctions and liquidation of assets’. Article 7 on the other hand covers for ‘storage and bailment of goods’ and is appropriately named as ‘Warehouse receipts, bills of landing and other documents of title’. The last two Articles, the Article 8 and the 9 provides for ‘investment securities’ and ‘secured transactions’ respectively.
Usefulness of the UCC
The UCC has also been referred when formulating international instruments to deal with similar legal challenges in other parts of the world. For instance, certain sections of the UCC have been used during the drafting of the CISG or the United States Convention on Contracts for the International Sale of Goods. However, the final version of the CISG deviates from the UCC in many different aspects.