Last Updated 28 Aug 2016

Uniform Commerical Code (UCC)

Category Contract, Justice
Words 897 (3 pages)

The UCC refers to the Uniform Commercial Code which originally created in year 1952 by the National Conference of Commissioners on Uniform State Laws and the American Law Institute, which are two national nongovernmental legal organizations (Steingold, 2013). These two private entities recommend that the 50 state governments adopt the UCC; however, it does not become law unless it’s enacted by the state. The UCC is a “comprehensive statutory scheme which includes laws that cover aspects of commercial transactions” (Cheeseman, 2012, p. 161).

The UCC divided into nine main articles; general provisions; sales and leases, negotiable instruments, bank deposits and collections, funds transfer, letters of credit, bulk transfers/bulk sales, documents of title, investment securities and secured transactions (Steingold, 2013). The UCC contains many fundamental rules with over a hundred different sections with the two main provisions being the UCC article 2 (sales) and article 2a (leases). If the states want to conduct business transactions such as borrowing money, leasing equipment, establishing contracts and selling goods, these are excellent sections to use under the UCC.

Why UCC is necessary By the turn of the 20th century, as the national economy grew, there seem to be a need, and it became necessary to regulate business transactions in a uniform way (Kent, 2013). The UCC believed to become necessary in order to protect business well as individuals, for uniformity, with a primary purpose to make business laws highly consistent across all the American fifty states by making business activities more predictable and efficient.

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In the words of the UCC itself, the Code intended “to simplify, clarify and modernize” commercial law, “to permit the continued expansion of commercial practices...” and “to make uniform the law among the various jurisdictions” (Steingold, 2013, para. 1). This unified act, UCC, is an effort to harmonize the law of sales and other commercial transactions within the United States of America in all fifty states (US Legal, Inc. , 2013). Harmonizing the state laws considered also as being of important due to the prevalence of commercial transaction that extend beyond just one state; for example, one state may manufacture the good, another state may warehouse goods, the next state may be use to sell goods, and the last state to deliver the goods.

The UCC goal is to achieve substantial uniformity in commercial laws, and at the same time it allows the states the flexibility to meet circumstances locally by modifying the UCC’s text as enacted in each state. The reason the 50 states have adopted the UCC Given what's known about the law of contact verse Uniform Commercial Code, it’s believed that the reason that the 50 states and territories have enacted some versions of UCC is because it addresses most aspects of commercial laws and aspects of uniformity.

In addition, the UCC rules applies directly or indirectly to so many transactions concerning business offers goods and/or services (including software) or products that most state more than likely feel it to be a good idea to comply because it brings uniformity. The UCC provides links directly to the state statues and once the state legislature adopts and enacts UCC it then becomes a state statute law and coded. Benefits & detriments of the UCC replacement

One significant benefit to UCC replacing the traditional law of contracts is that there is no development of contract forms. By adopting the UCC, other benefits are; interstate transactions, standardized commercial expectations, commercial stability, cost reduction and international trade. “The Uniform Commercial Code contributed significantly to the establishing of uniform laws governing commercial transactions from one state to the next: therefore, interstate commerce is more effectively and efficiently undertaken” (Broemmel, 2013, para.2).

UCC also makes commercial transaction less complex, simpler and by using the UCC it will help the states facilitate their sales of good, any banking transaction, as well as other areas within the UCC easier. All business can enjoy standardized commercial expectations because of the state laws governing commercial transaction uniformed. In addition, the UCC develops a strong sense of commercial stability because the UCC requires a contract for a sale of goods over $500 be in writing (Broemmel, 2013, para. 4).

As well, because of the commercial standardization created by the Uniform Commercial Code, other benefits of the UCC; cost reduction and price control (Broemmel, 2013, para. 5). Lastly, the benefit for international trade, “the UCC allows for expedited international trade because of the establishment of a uniform system of commercial law in each of the states, both the export and import of goods into the United States undertaken more efficiently, with significantly less red tape and in a more cost-effective manner” (Broemmel, 2013, para.6).

On the other side, from the commerce standpoint, the disadvantages to the UCC replacing the traditional law of contracts comes into play when it comes to consideration, it potentially does not take everything into account that may be of interest to the state, causing a conflict of laws. Another concern is with the change of technology, and the UCC needs to maintain a pace with the change of technology as methods by which commerce conducted changes.

As well, when it comes to UCC filings, Dunn & Bradstreet states “it is one of their determinants features on their credit report” (Business. com Media, Inc. , 2013). “A UCC filing is a business document, filed to the Secretary of State, to enact a lien on a business” (Business. com, Media, Inc. , 2013, para. 2).

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