The Uniform Commercial Code
The Uniform Commercial Code, or UCC as it is often called, is a collection of rules regarding commercial transactions. For Newark commercial litigation involving goods or other matters in dispute, the UCC often serves as the deciding factor.
Complaints arising under the UCC make up a large percentage of the number of commercial lawsuits and complaints.
The function of the UCC is to serve as a country-wide set of guidelines for resolving business disputes as well as regulating the sales of property and other commercial transactions. This includes lending and borrowing agreements, commercial contracts, leases, and sales. Primarily, it serves to form the foundation of contract law. This includes what can and cannot be a provision of a contract in addition to when a breach of contract has occurred. It outlines the means by which disputes are resolved, best practices for creditors and lending, the means by which collections are handled, and more.
Formation of the UCC
Two national legal organizations collaborated to form the original UCC, the National Conference of Commissioners on Uniform State Laws and the American Law Institute. These entities set out to make commercial activities both more predictable and consistent across the country.
The UCC is divided into nine separate articles, and every state (with the exception of California) uses these articles to form the basis of the regulatory environment in which businesses operate. California has its own articles but these are quite similar to the UCC. Each article has parts that are then subdivided into sections. Each section contains its own separate rule.
What topics does the UCC discuss?
The UCC is divided into 11 articles. These articles are further divided into sections. Some of the topics that the UCC discusses include the following:
- Sales and leases
- Negotiable instruments
- Funds transfers, letters of credit, bank deposits and bank collections
- Title documents
- Investment securities
- Secured transactions; and
- Bulk sales
The UCC provides definitions of commercial contract terms
When there is a contract for goods or the court seeks to interpret a particular provision, courts handling Newark commercial litigation cases often turn to the UCC for guidance. The UCC provides specific definitions of common terms found in commercial contracts. The UCC generally covers information related to the sale of goods, as opposed to services. If leases are mentioned in the UCC, they typically apply to leases for goods and not for real estate.
Versions and amendments of the UCC
The original UCC was published in 1952. However, there have been multiple revisions of the UCC. On its own, the UCC does not have legal authority. However, all states have adopted all or a portion of some version of the UCC. Sometimes, there are very significant lags between the time an amendment is made to the UCC and when the state officially adopts the revision. In practical application, the UCC can be looked to for a guide on the norm throughout multiple states.
UCC lawsuits and UCC filing lawyers
A UCC filing is a lawsuit brought on behalf of one party against another in which one party alleges that there is a violation of the UCC. Common kinds of UCC disputes involve:
- Breach of contract,
- Sales of goods or services,
- Illegal provisions of a contract, and
- Ambiguous or missing terms in a contract.
UCC filings can be resolved by litigation, mediation, or arbitration. In some cases, a dispute resolution may simply involve compelling one party to satisfy the terms of their contract. However, in other cases, the heart of the contract may break down completely and one party may lose faith in the other party’s ability or willingness to satisfy the terms of the contract. In that case, the non-breaching party may sue the breaching party for compensatory and punitive damages when appropriate. They be compensated for lost time, lost money related to the failure of the other party to fulfill their end of the bargain, and fraudulent promises made.
The damages can be thought of as the following:
Consequential damages are awarded on the basis of the breaching party’s failure to uphold the terms of the contract. The harm caused to the non-breaching party must be shown to be foreseeable.
Incidental damages are those resulting from the financial distress caused by the breach of contract. The non-breaching party is entitled reasonable commercial expenses that are shown to have been incurred during or after the breach which the non-breaching party cannot otherwise recover.
Liquidated damages are predetermined estimates that represent the financial injury that would occur if the contract is breached. They can function as insurance and generally are stated in the contract.
Reliance damages are calculated by determining how much money it would take to make a non-breaching whole or restore them to the economic position they were in before the breach occurred. Here, you would need to show that you relied on a promise made and the breaching party reneged on that promise.
Example of a UCC Violation
As an example, let’s say that a hospital contracts with a software company in order to hold patient records. The hospital has overhauled its system in order to accommodate the new software which the software company has promised will be ready by June 1st. The hospital has purchased new computers that were ordered to specifications required to run the new software. June comes around, and the software company has failed to produce the new software. It turns out that the software company lacks the ability to produced software capable of satisfying HIPAA or federal standards.
The contract is breached and the hospital no longer has the confidence that the software company is capable of making good on the promise they made to the hospital. Now the hospital has purchased hundreds of thousands of dollars in expensive equipment that is more expensive than they need to operate on their old software, which they’re stuck with.
The hospital files a lawsuit against the software company alleging a UCC violation and breach of contract.
Legal Assistance from a Newark Commercial Litigation Attorney
Filing a UCC complaint is a very technical process. Therefore, having a business litigation attorney who is familiar with the Universal Commercial Code file the complaint on your behalf will yield the best possible results.
If you would like to know more about the UCC as well as its potential implications on your contract, contact a Newark commercial litigation attorney from Snellings Law LLC.