Uniform Commercial Code

• Author: Cindy Victor, Laurie Hillstrom
• Pages: 943-944

Page 943

The Uniform Commercial Code (UCC) is a collection of recommended laws covering many different issues that arise during commercial transactions, such as sales contracts, leases, negotiable instruments, letters of credit, bank collections, and secured transactions. The impetus behind the creation of the UCC was the hope that each state would adopt it as a statute, thereby giving uniformity throughout the country to the area of commercial law.

HISTORY

The first draft of the UCC was created in the fall of 1951 by an editorial board consisting of representatives from the National Conference of Commissioners on Uniform State Laws and the American Law Institute. Pennsylvania adopted the draft as state law in 1953, but no other state enacted it until the editorial board issued a revised code in late 1956. After the revision, Massachusetts and Kentucky were the first to adopt the UCC. Today, all of the states (except Louisiana, which has only adopted certain parts) and the District of Columbia have adopted the UCC.

TOPICS COVERED BY THE UCC

Until 1987, the UCC consisted of nine articles. Each article was separate and distinct from the other articles, and covered a specific topic in commercial law.

Article 1 is entitled "General Provisions," and sets forth general definitions and principles of interpretation for all of the articles.

Article 2, "Sales," controls every stage of a transaction for the sale of goods, from general obligations, construction of a contract, and performance under that contract to breach, repudiation, and excuse of a sales contract. Article 2 also provides remedies for problems that may occur during a sales transaction.

Article 3 covers negotiable instruments, which include checks, cashiers' checks, travelers' checks, promissory notes, and certificates of deposit. This article regulates all transactions involving negotiable instruments, such as negotiation and endorsements; payment on the instruments; liability of parties such as the endorser, drawer, and acceptor; and dishonor of the instrument.

Article 4, "Bank Deposits and Collections," regulates collect items and post deposits, and governs the relationship among depository, collecting, and payer banks, and between a payer bank and its customer.

Article 5 addresses letters of credit, including the issuer's obligations, warranties that arise, and remedies that are provided for problems during...