Uniform-Commercial-Code 2011 UCC

2418 Pages·08.583 MB·English

by  coll.

UNIFORM
COMMERCIAL
CODE
2010-2011 Edition
Issued in December 2010
The American Law Institute
National Conference of
Commissioners on Uniform State Laws
OFFICIAL TEXT AND COMMENTS
INCLUDING
Article 1 (General Provisions)
Article 2 (Sales)
Article 2A (Leases)
Article 3 (Negotiable Instruments)
Article 4 (Bank Deposits and Collections)
Article 4A (Funds Transfers)
Article 5 (Letters of Credit)
Article 6 (Bulk Sales)
Article 7 (Documents of Title)
Article 8 (Investment Securities)
Article 9 (Secured Transactions)
Article 10 (E(cid:1)ective Date and Repealer)
Article 11 (E(cid:1)ective Date and Transition Provisions)
APPENDICES
INDEX
TheExecutiveO(cid:2)ce NationalConferenceof
TheAmericanLawInstitute CommissionersonUniformStateLaws
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TEXTANDNOTESCOPYRIGHT©1948-1950,1952,1958,1959,1963,1972,1978,
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THEAMERICANLAWINSTITUTE
and
NATIONALCONFERENCEOFCOMMISSIONERS
ONUNIFORMSTATELAWS
COPYRIGHT©2010
By
THEAMERICANLAWINSTITUTE
and
NATIONALCONFERENCEOFCOMMISSIONERS
ONUNIFORMSTATELAWS
INDEXCOPYRIGHT©2010
By
ThomsonReuters
TEXT OF UNIFORM COMMERCIAL CODE AND OFFICIAL COMMENTS REPRINTED WITH
PERMISSION OF THE AMERICAN LAW INSTITUTE AND THE NATIONAL CONFERENCE OF
COMMISSIONERSONUNIFORMSTATELAWS.
This publication was created to provide you with accurate and authoritative information
concerning the subject matter covered; however, this publication was not necessarily pre-
pared by persons licensed to practice law in a particular jurisdiction. The publisher is not
engaged in rendering legal or other professional advice and this publication is not a
substitute for the advice of an attorney. If you require legal or other expert advice, you
shouldseektheservicesofacompetentattorneyorotherprofessional.
PREFACE
This Pamphlet contains the text of the Uniform Commercial Code pre-
pared under the joint sponsorship of The American Law Institute and the
National Conference of Commissioners on Uniform State Laws, current
through December, 2010.
The Code is a comprehensive modernization of various statutes relat-
ing to commercial transactions including sales, leases, negotiable instru-
ments, bank deposits and collections, funds transfers, letters of credit,
bulk sales, documents of title, investment securities and secured
transactions. It replaces the former Uniform Laws relating to sales,
conditional sales, negotiable instruments, warehouse receipts, bills of lad-
ing, stock transfers and trust receipts.
The Code was originally approved by its sponsors and the American
Bar Association in 1952, and it has been amended a number of times in
succeeding years. An e(cid:1)ort to modernize and update the Code was begun
in 1987 when new Article 2A was approved. New Article 4A (Funds
Transfers) was approved in 1989, and Article 6 (formerly Bulk Transfers,
now Bulk Sales) was revised that same year. In 1990, substantial amend-
ments were made to Article 2A (Leases). Article 3 (formerly Commercial
Paper, now Negotiable Instruments) was also revised in 1990. Article 8
(Investment Securities) was revised in 1994, and Article 5 (Letters of
Credit) was revised in 1995. Revised Article 9 (Secured Transactions) was
promulgated in 1998 with subsequent amendments and modi(cid:3)cations in
1999, 2000, and 2001. Article 1 (General Provisions) was revised in 2001.
Article 7 (renamed Documents of Title) was revised in 2003. Article 2
(Sales) and Article 2A (Leases) were amended in 2003 and 2005.
This 2009 edition of the Pamphlet contains Permanent Editorial Board
Commentary No. 16 (2009) regarding sections 4A-502(d) and 4A-503. The
Commentary indicates that neither the originator nor the bene(cid:3)ciary of a
funds transfer has any property claim to the value held by an intermedi-
ary bank in a funds transfer.
OFFICIAL COMMENTS
One of the indispensable features herein consists of the O(cid:2)cial Com-
ments, prepared by the National Conference of Commissioners on Uniform
State Laws and The American Law Institute, which appear under each
section. These Comments explain the purpose and intent of the sections
and the changes in the prior law that were e(cid:1)ected by the Code.
APPENDIX CONTAINING PERMANENT EDITORIAL
BOARD (PEB) COMMENTARY
The Permanent Editorial Board for the Uniform Commercial Code will
issue supplementary commentary on the Code from time to time. The (cid:3)nal
draft of Commentaries 1 to 15 may be found in Appendix A. (PEB Com-
iii
Uniform Commercial Code Reporting Series
mentaries 8 and 11 have been amended to comport with Revised Article 9.)
These commentaries normally identify an issue, discuss the issue and
come to a conclusion as to how the issue should be resolved. Often, the
conclusion will result in a change in the O(cid:2)cial Comment of one or more
sections of the Code. The O(cid:2)cial Comment, when so changed, will gener-
ally refer to the PEB Commentary which brought about the change. All
changes in the O(cid:2)cial Comments as a result of Commentaries 1 to 15
have been incorporated into this Pamphlet.
APPENDICES RELATING TO 1972, 1977, AND 1987 CHANGES
Appendices are included containing material relating to the 1972 revi-
sion of Article 9, the 1977 revision of Article 8 and the 1987 adoption of
Article 2A. Appendix B shows the changes in Article 9, and related
sections. Included under each section are statements as to the reasons for
change. Appendix C shows the changes in Article 8, and related sections.
Included under each section are statements as to the reason for change.
Appendix D contains amendments to Article 1 and Article 9 conforming to
new Article 2A.
APPENDICES CONTAINING TEXT AND
OFFICIAL COMMENTS OF PRE-REVISION
ARTICLES 1, 3, 5, 6, 7, 8, AND 9
Article 6 was revised in 1989, Article 3 was revised in 1990, Article 8
was further revised in 1994, Article 5 was revised in 1995, Article 9 was
revised in 1998, Article 1 was revised in 2001, and Article 7 was revised in
2003. The pre-revision versions of the Text and O(cid:2)cial Comments of these
articles may be found variously in Appendix E (Pre-Revision Article 6), Ap-
pendix G (Pre-Revision Article 3), Appendix L (Pre-Revision Article 8), Ap-
pendix N (Pre-Revision Article 5), Appendix O (Pre-Revision Article 9), Ap-
pendix P (Pre-Revision Article 1), and Appendix R (Pre-Revision Article 7).
APPENDIX CONTAINING 1990 ARTICLE 1 AMENDMENTS
CONFORMING TO REVISED ARTICLE 3
In conjunction with the revision of Article 3 in 1990, conforming amend-
ments to Article 1 were approved. These amendments may be found in Ap-
pendix H.
APPENDICES CONTAINING 1990 AMENDMENTS
TO ARTICLE 2A
In 1990, 24 text amendments were made to Article 2A. In addition, the
O(cid:2)cial Comments of three sections, which were not amended textually,
were changed to conform to the various text amendments. All of these may
be found in Appendix F.
TO ARTICLE 4
In 1990, a substantial number of amendments were made to Article 4.
Many of these were made to conform to Revised Article 3. Others were
miscellaneous amendments. These amendments, together with the reasons
for the 1990 changes, may all be found in Appendix I.
iv
Preface
APPENDIX CONTAINING VARIOUS 1994 AMENDMENTS
Various amendments were made in 1994 not relating to the revision of
Article 8. These amendments may be found in Appendix J.
APPENDIX CONTAINING 1994 AND 1995 AMENDMENTS
TO ARTICLES 1, 3, 4, 5, 9, AND 10 CONFORMING
TO 1994 REVISION OF ARTICLE 8
In 1994 and 1995, amendments to Articles 1, 3, 4, 5, 9, and 10 were
made to conform to the 1994 revision of Article 8. These amendments may
be found in Appendix K.
APPENDIX CONTAINING 1995 AMENDMENTS TO ARTICLES 1, 2,
AND 9 CONFORMING TO REVISED ARTICLE 5
In 1995, amendments to Articles 1, 2, and 9 were made to conform to
the revision of Article 5. These amendments may be found in Appendix M.
APPENDIX CONTAINING 2002 AMENDMENTS
TO ARTICLES 3 AND 4
Articles 3 and 4 were amended in 2002. The amendments may be found
in Appendix Q.
APPENDICES CONTAINING 2003 AMENDMENTS
TO ARTICLES 2 AND 2A
Articles 2 and 2A were amended in 2003. The amendments may be
found in Appendices T and U, respectively.
APPENDIX CONTAINING 2005 AMENDMENTS
A number of amendments and O(cid:2)cial Comment corrections were ap-
proved in 2005 a(cid:1)ecting Articles 1, 2, 2A, 3, and 9. These changes may be
found in Appendix V.
APPENDIX CONTAINING 2006 OFFICIAL COMMENT
CORRECTIONS
O(cid:2)cial Comment corrections a(cid:1)ecting Articles 2A and 9 were approved
in 2006. The corrections may be found in Appendix W.
APPENDIX CONTAINING 2008 AMENDMENT
Amendment of Article 1-301 was approved in May, 2008. The amend-
ment may be found in Appendix X.
APPENDIX CONTAINING PRE-REVISION ARTICLE 2
Article 2 was amended in 2003 and has not yet been adopted. Pre-
revision Article 2 can be found in Appendix Y.
SPECIAL FEATURES
The various materials in the preliminary part of this Pamphlet all con-
tribute to a better understanding of the Code and aid in its interpretation.
v
Uniform Commercial Code Reporting Series
The Foreword, written by the Chair of the Permanent Editorial Board,
provides an up-to-date overview of the recent modernization of the Code.
The Article, Part and Section analysis, beginning on page 1, provides an
easy means of (cid:3)nding particular provisions of the Code.
INDEX
This edition includes an up-to-date index prepared by the publisher’s
Editorial Sta(cid:1).
The Publisher
December 2010
vi
PERMANENT EDITORIAL BOARD FOR
THE UNIFORM COMMERCIAL CODE
CHAIR
John A. Sebert, Chicago, Illinois
Executive Director, NCCUSL
MEMBERS
ALI Designees NCCUSL Designees
E. Carolan Berkley, Boris Auerbach,
Philadelphia, PA Indianapolis, IN
Amelia H. Boss, Patricia Brumfield Fry,
Philadelphia, PA Edgewood, NM
Stephanie Heller, Carlyle C. Ring, Jr.,
Brooklyn, NY Washington, DC
Lance Liebman,
Edwin E. Smith,
New York, NY
Boston, MA
Linda J. Rusch,
James J. White,
Spokane, WA
Ann Arbor, MI
Steven O. Weise,
DIRECTOR OF RESEARCH
Los Angeles, CA
Neil B. Cohen,
EMERITUS MEMBERS
Brooklyn, NY
Marion W. Benfield, Jr.,
LIAISONS
New Braunfels, TX
Carter H. Klein,
William H. Henning,
Chicago, IL
Tuscaloosa, AL
Fred H. Miller, ABA Business Law Section
Teresa W. Harmon,
Norman, OK
Chicago, IL
EX OFFICIO
ABA Advisor
Roberta Cooper Ramo,
ALI STAFF
Albuquerque, NM
Deanne Dissinger,
President, ALI
Robert A. Stein, Philadelphia, PA
Stephanie Middleton,
Minneapolis, MN
Philadelphia, PA
President, NCCUSL
NCCUSL STAFF
Michael R. Kerr,
Chicago, IL
Katie Robinson,
Chicago, IL
vii

FOREWORD
TO
OFFICIAL TEXT AND COMMENTS
The Permanent Editorial Board and its constituent organizations, the
American Law Institute and the National Conference of Commissioners on
Uniform State Laws, have worked for more than two decades to update
the Uniform Commercial Code. The e(cid:1)ort has been greatly assisted by the
American Bar Association, which has provided advisers at each step along
the way.
This e(cid:1)ort began with two new articles: Article 2A, (cid:3)rst promulgated
in 1987 and revised in 1990, provides a legal structure for leases of goods,
and Article 4A (1989) governs commercial funds transfers. The PEB then
directed its attention to the original articles of the Code. The primary goal
was not to create new law but rather to bring the articles up to date in
terms of modern business practices and technology. Articles 3 and 4, cover-
ing negotiable instruments and bank deposits and collections, were
thoroughly revised in 1990 (and amendments to a limited number of par-
ticular provisions in those articles were recommended in 2002). The PEB
then recommended repeal of Article 6 (dealing with bulk sales) as no lon-
ger necessary in light of modern commercial realities; as an alternative for
jurisdictions that chose not to repeal the article, the PEB drafted a revised
version of Article 6. Article 8, dealing with investment securities, was
revised in 1994, primarily to provide a full set of rules for the “indirect
holding system” that had developed in the securities markets in order to
facilitate trades. Article 5, which governs letters of credit, was revised in
1995 to coordinate better with developments in domestic and international
letter of credit practice. The modernization of the law of secured credit
codi(cid:3)ed in Article 9, a large undertaking with great commercial signi(cid:3)-
cance, was a major achievement. The state legislatures quickly enacted
these revised articles. In the case of Article 9, nationwide enactment was
accomplished in just three years, a remarkable achievement.
The next step in the modernization process was the promulgation in
2001 of a revised text of Article 1 which, in addition to de(cid:3)nitions, contains
alimitednumberofbasicsubstantiverulesgenerallyapplicablethroughout
the UCC. Most recently, a set of amendments to sections in Articles 2 and
2A and a revised version of Article 7 were promulgated in 2003. Much of
this work, along with the 2002 amendments to Articles 3 and 4, remains
on the agenda for enactment in the states. Throughout the modernization
project, the PEB and the sponsoring organizations have been cognizant of
the need to amend and revise the articles in a manner that comports with
modern commercial practices, including the now-prevalent use of electronic
methods of doing business. At the same time, the amendments and revi-
sions have exhibited sensitivity to the unique issues that sometimes come
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Uniform Commercial Code
into play when transactions involve consumers.
The Conference and the Institute are proud of the modernization of the
UCC and grateful to the Reporters and the members of Drafting Commit-
tees who devoted long hours to this work, as well as to the many others
who participated in the process, especially those who o(cid:1)ered constructive
criticism and who patiently worked to improve laws so crucial to the
economy of the United States.
John A. Sebert
Chair
Permanent Editorial Board for
the Uniform Commercial Code
December 2010
x