Chapter 2- Law
§10. UCC
The suggested laws and standardization of commercial transactions throughout the international commercial community are known as the Uniform Commercial Code, or “UCC”.175 “The UCC was one of many uniform codes that grew out of a late nineteenth- century movement toward uniformity among state laws. By 1967, the District of Columbia and all the states, with the exception of Louisiana, had adopted the UCC in whole or in part. Louisiana eventually adopted all the articles in the UCC except articles 2 and 2A.
The UCC is divided into nine articles, each containing provisions that relate to a specific area of Commercial Law.
Article 1, General Provisions, provides definitions and general principles that apply to the entire code.
Article 2 covers the sale of goods.
Article 3, Commercial Paper, addresses negotiable instruments, such as promissory notes and checks.
Article 4 deals with banks and their handling of checks and other financial documents.
Article 5 provides model laws on letters of credit, which are promises by a bank or some other party to pay the purchases of a buyer without delay and without reference to the buyer's financial solvency.
Article 6, on bulk transfers, imposes an obligation on buyers who order the major part of the inventory for certain types of businesses. Most notably, article 6 provisions require that such buyers notify creditors of the seller of the inventory so that creditors can take steps to see that the seller pays her debts when she receives payments from the buyer.
Article 7 offers rules on the relationships between buyers and sellers and any transporters of goods, called carriers. These rules primarily cover the issuance and transfer of warehouse receipts and bills of lading. A bill of lading is a document showing that the carrier has delivered an item to a buyer.
Article 8 contains rules on the issuance and transfer of stocks, bonds, and other investment Securities.
Article 9, Secured Transactions, covers security interests in real property. A security interest is a partial or total claim to a piece of property to secure the performance of some obligation, usually the payment of a debt. This article identifies when and how a secured interest may be created and the rights of the creditor to foreclose on the property if the debtor defaults on his obligation. The article also establishes which creditors can collect first from a defaulting debtor. 176
The [American Law Institute] ALI and the [National Conference of Commissioners on Uniform State Laws] NCCUSL periodically review and revise the UCC. Since the code was originally devised, the House of Delegates of the American Bar Association has approved two additional articles: article 2A on Personal Property leases, and article 4A on fund transfers. Article 2A establishes model rules for the leasing or renting of personal property (as opposed to real property, such as houses and apartments). Article 4A covers transfers of funds from one party to another party through a bank. This article is intended to address the issues that arise with the use of new technologies for handling money.177
Most states have adopted at least some of the provisions in the UCC. The least popular article has been article 6 on bulk transfers. These provisions require the reporting of payments made, which many legislators consider an unnecessary intrusion on commercial relationships.178
UCC §1-103. Construction of [Act] to Promote Its Purposes and Policies; Applicability of Supplemental Principles of Law.
(a) [The Uniform Commercial Code] must be liberally construed and applied to promote its underlying purposes and policies, which are:
(1) to simplify, clarify, and modernize the law governing commercial transactions;
(2) to permit the continued expansion of commercial practices through custom, usage, and agreement of the parties; and
(3) to make uniform the law among the various jurisdictions.
(b) Unless displaced by the particular provisions of [the Uniform Commercial
Code], the principles of law and equity, including the law merchant and the law relativeto capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating and invalidating cause supplement its provisions.179
The constitution allotted congress the ability to pass all laws for the internal regulations of the national government, for the standardization of interstate commerce, and for a uniformed system of the distribution of justice for cases arising in common law, equity and admiralty jurisdictions. Many people are accustomed to the view of absolutism, perhaps through social fashions and customary procedures, and many will comfortably wish to remain within such parameters, but the contextual limitations of power are based solely off of consent and jurisdiction.
UCC 1-308 allots the reservation of rights not specified to the signatory of any contract entered, and can be very important in the sea of commerce.
Uniform Commercial Code › U.C.C. - ARTICLE 1 - GENERAL PROVISIONS (2001) › PART 3. TERRITORIAL APPLICABILITY AND GENERAL RULES › § 1-308. Performance or Acceptance Under Reservation of Rights.
§ 1-308. Performance or Acceptance Under Reservation of Rights.
(a) A party that with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as "without prejudice," "under protest," or the like are sufficient.
“The general rule is that an unconstitutional statute, whether Federal or State, though having the form and name of law is in reality no law, but is wholly void and ineffective for any purpose since unconstitutionality dates from the enactment and not merely from the date of the decision so braining it. An unconstitutional law in legal contemplation is as inoperative as if it never had been passed. Such a statute gives a question that it purports to settle just as it would be had the statute not ever been enacted. No repeal of an enactment is necessary, since unconstitutional law is void. The general principles follow that it imposes no duty, confers no rights, creates no office, bestows no power of authority on anyone, affords no protection and justifies no acts performed under it. A contract which rests on an unconstitutional statute creates no obligation to be impaired by subsequent legislation. No one is bound to obey an unconstitutional law. No courts are bound to enforce it. Persons convicted and fined under a statute subsequently held unconstitutional may recover the fines paid. A void act cannot be legally inconsistent with a valid one and an unconstitutional law cannot operate to supersede an existing valid law. Indeed, in so far as a statute runs counter to the fundamental law of the land, it is superseded thereby. Since an unconstitutional statute cannot repeal, or in anyway effect an existing one, if a repealing statute is unconstitutional, the statute which it attempts to repeal remains in full force and effect and where a clause repealing a prior law is inserted in the act, which act is unconstitutional and void, the provision of the repeal of the prior law will usually fall with it and will not be permitted to operate as repealing such prior law. The general principle stated above applied to the constitution as well as the laws of the several states insofar as they are repugnant to the constitution and laws of the United States.”180
"Crime is contagious. If the Government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy."181
“What do we mean when we say that first of all we seek liberty? I often wonder whether we do not rest our hopes too much upon constitutions, upon laws, and upon courts. These are false hopes; believe me, these are false hopes. Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can save it; no constitution, no law, no court can even do much to help it. And what is this liberty which must lie in the hearts of men and women? It is not the ruthless, the unbridled will; it is not freedom to do as one likes. That is the denial of liberty, and leads straight to its overthrow. A society in which men recognize no check upon their freedom soon becomes a society where freedom is the possession of only a savage few; as we have learned to our sorrow.” 182
"The innocent individual who is harmed by an abuse of governmental authority is assured that he will be compensated for his injury."183
[175 Further readings: Benfield, Marion W., Jr., and William D. Hawkland. (1992). Sales: Cases and Materials. 3d ed. Westbury, N.Y.: Foundation Press; "Annual Survey of Commercial Law: The Uniform Commercial Code Survey." (2003). Business Lawyer 58 (August). Cooper, Corinne, ed. (2000). The Portable UCC. 3d ed. Chicago: Section of Business Law, American Bar Association; Miller, Frederick H., and Alvin C. Harrell. (2002). The ABCs of the UCC. Related Insolvency Law. Chicago: American Bar Association.
176 The Portable UCC Fourth Edition (2005)
177 The Portable UCC Fourth Edition (2005)
178 West's Encyclopedia of American Law, edition 2 (1997)
179 The Portable UCC Fourth Edition, (2005), pg. 2, Article 1, Part 1, §1-103
180 16Am Jur 2., Sec. 256 (1962)
181 Olmstead v. United States, (1928) 277 U.S. 438
182 The Spirit of Liberty, by Judge Billings Learned Hand, pg. 190 (1952)
183 Owen v. City of Independence, 100 S.Ct 1398 (1980)]