Introduction to the Uniform Commercial Code and Article 1

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Chapter 1. Introduction to the Uniform Commercial Code and

Article 1

1.1. History of the UCC. As interstate commerce grew, so did the need for national uniformity

in laws applicable to commercial transactions. Under the leadership of Professor Karl Llewellyn,

the American Law Institute (ALI) and the National Conference of Commissioners on Uniform

State Laws (NCCUSL) (which is now known as the Uniform Law Commission or ULC)

promulgated the Uniform Commercial Code (UCC or Code), which was first enacted by a state

in 1953. Today, all states have enacted most parts of the UCC, although there are some

variations. Louisiana is the only state that has not enacted Article 2.

1.1.1. Article 1 of the UCC contains general provisions that, according to Revised § 1-

102, apply when a transaction is governed by another article of the UCC. For example,

statements of purpose, rules of construction, and general definitions are contained in

Article 1. In 2001, the ULC promulgated changes to Article 1; these changes are known

as Revised Article 1. Most states have adopted Revised Article 1, although none has

enacted it in its uniform version. For a tally of adopting states, see the web site of the

Uniform Law Commission at http://www.uniformlaws.org.

Note the three significant changes that Revised Article 1 made to former Article 1. It (1)

clarifies that Article 1 applies only to Code transactions, (2) clarifies that the concept of

course of performance applies throughout the Code, and (3) redefines good faith. When a

jurisdiction enacts Revised Article 1, it also makes a few changes to Article 2 to

coordinate with the changes in Article 1.

1.1.2. In 1999, the ALI voted to support a draft Revised Article 2, but the ULC did not

support it, probably because of the perceived difficulty of enacting such a substantial

revision in the states. In 2003, the ULC drafted a less radical version known as Amended

Article 2. In May 2011, the ULC and the ALI agreed to withdraw Amended Article 2

from consideration by the states. No state has enacted either Revised Article 2 or

Amended Article 2. Nevertheless, reference to the proposed revisions may be valuable for

seeing the clarifications that were made to the existing text.

The bottom line is that a statute more than 50 years old governs modern commercial

transactions. As we will see, the Code has a great deal of flexibility in the joints to

accommodate change, but there will be many strains put on it.

1.1.3. Unless otherwise indicated, when these materials cite sections from Article 1 and

Article 2, this refers to the sections as found in Revised Article 1 and the pre-2003

version of Article 2 as amended to reflect Revised Article 1. When researching the law of

a particular jurisdiction, you will have to determine (1) whether that jurisdiction has