When an issue arises in commercial law, in most cases the litigation falls under the Uniform Commercial Code (UCC). This Code is the bedrock of most commercial transactions in the United States that includes what can and cannot be included in a commercial contract as well as identifies when a breach of contract has occurred. At Snellings Law in New Jersey, our team of highly qualified legal professionals is here to protect your rights in a commercial dispute that involves the UCC. Call or contact the office to schedule a consultation of your case with one of our experienced attorneys today.
What is the Uniform Commercial Code?
The Uniform Commercial Code is a comprehensive set of laws that govern all commercial transactions in the United States. It is not a federal law, but state law that has been uniformly adopted by all states. It was created by the Uniform Law Commission and American Law Institute and offered to the states for adoption in 1951. Over the next 20 years, every state in the United States adopted the UCC to govern the commercial transactions in their jurisdiction.
Sections of the Uniform Commercial Code
There are nine main sections to the UCC, known as Articles 1-9. Each governs the laws regarding different types of commercial transactions. Articles 1-9 govern the following:
- Article 1: Definitions and general provisions applicable to the default rules of transactions covered in other articles of the UCC
- Article 2: Governs the sale of goods and leases of personal property
- Article 3: Governs negotiable instruments, including drafts and notes representing a promise to pay and have independent value because they are negotiable, which means that the instruments can be transferred to another person and still be enforceable against the person who made the promise to pay
- Article 4: Governs bank deposits and collections, including rules for check processing and automated inter-bank collections in addition to all the rights and obligations associated with funds transfers
- Article 5: Governs letters of credit, which are usually issued by banks or other financial institutions to its business customers
- Article 6: Governs bulk sales, which has mostly been repealed by nearly every state since it has become obsolete
- Article 7: Governs documents of title for personal property, which includes warehouse receipts, bills of lading, and other documents normally used in the course of commercial trade that includes electronic documents of title
- Article 8: Governs the rules regarding the system of holding securities through intermediaries, including the mechanisms by which ownership and other interests are recorded and changed
- Article 9: Governs secured transactions that involve granting credit by securing it with personal property
Identifying violations in a contract or loan under the Uniform Commercial Code can be a complex and technical process, which is why you should always have an experienced commercial litigation attorney representing your interests in the case.
Amendments and Updates to the UCC
Since its initial adoption, there have also been amendments and updates to the UCC. For example, in 2002 amendments were made to Articles 3 and 4 regarding negotiable instruments and bank deposits that updated the code to address payment by checks and other paper instruments that could now be made electronically to keep the UCC up to date with the latest technology and practices. Amendments were also made to Article 9 regarding secured transactions and the technicalities of filing issues, such as the form of the name of an individual debtor on a financing statement.
UCC Financing Statements
Many contracts today that fall under the Uniform Commercial Code involve secured transactions, which requires that the borrower provide collateral in case of default. When personal property is used as collateral, a UCC-1 financing statement must also be prepared, signed, and filed. This is known as perfecting the security interest and makes this exchange a secured loan. The financing statement creates a lien against the property used as collateral so that the borrower in the secured transaction cannot sell off the property before paying off the debt. In addition to disputes over contracts, many other legal issues often arise around UCC-1 financing statements and the collateral claimed in these documents.
Contact a Knowledgeable Attorney Today
If you have an issue with a breach of contract, sale of goods or services, illegal provisions in a contract, or ambiguous contract terms under the Uniform Commercial Code, our office is here to help. Call or contact Snellings Law in New Jersey to schedule a consultation of your case with one of our top tier commercial litigation attorneys now.