The History of the UCC

The History of UCC Searches & Filings

In 1942, a group of legal scholars began work on one of the longest and most comprehensive sets of uniform laws in the United States: the Uniform Commercial Code (UCC).

 

Two organizations, the American Law Institute, which also developed the Restatements of Law, and the National Conference of Commissioners on Uniform State Laws, developed the Code.

 

The UCC built on earlier uniform commercial acts involving transactions, such as negotiable instruments and sales receipts, adopted by many state legislatures starting in 1896.

 

The purpose of the Code was to harmonize laws in all 50 states concerning sales and commercial transactions.

 

Prior to the creation of the UCC, many business owners were unsure which law applied if a merchant shipped a product manufactured in one state to a second or third state.

 

At the time, the laws governing the contracts between the merchant, manufacturer, and shipper differed from state to state.

 

After ten years of work the Code was published, and Pennsylvania was the first state to adopt it.

 

The Code universalized commercial transactions and provided state governments with a set of laws concerning business transactions.

 

These laws were codified by 49 states and territories. However, Louisiana and Washington, D.C. have adopted only parts of the Code.

 

Early drafts of the UCC were considered radical, promising truth-in-lending protections to consumers and strict regulation of the formation and performance of contracts.

 

The drafters eventually dropped many of these pro-consumer provisions in an attempt to create language that would be acceptable to large numbers of state legislators.

 

Nonetheless, the UCC has retained key characteristics that provide certain protections to consumers.

 

For example, the UCC encourages avoiding formalities, which means a party need not use the specific word “offer” for the parties to understand an offer was made.

 

The UCC also favors open-ended standards, which are open to some judicial interpretation and application, over firm, bright-line rules.

 

The nine articles of the UCC address various aspects of sales, including the sale of goods, leases of goods, negotiable instruments, bank deposits, fund transfers, letters of credit, bulk sales, warehouse receipts, bills of lading (i.e., receipts for shipped goods), investment securities and secured transactions.

 

Some legal scholars today consider the UCC one of the most important developments in American law.

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