The Uniform Commercial Code covers legal aspects of many business activities. Here, the business law attorneys at AFSL briefly outline these laws and the impact they can have on businesses.
Unique challenges arise for businesses that enter into transactions in several states when each state has significantly different commercial law. The Uniform Commercial Code (UCC) was published to help make business activities more predictable by having a uniform code of provisions for sales and other commercial transactions. While States, the District of Columbia and U.S. Territories can adopt some or all of the UCC, all 50 States and the District of Columbia have enacted most, if not all, of the UCC.
What Does the UCC Law Cover?
The UCC is complex and broad in its scope. The UCC applies to numerous aspects of business, including:
- Sales of goods
- Leases of goods
- Promissory notes and other negotiable instruments
- Bank deposits and collections
- Fund transfers
- Letters of credit
- Bulk transfers and bulk sales
- Storage and bailment of goods
- Investment securities
- Secured transactions
The UCC is divided into titles, subtitles and sections. Official comments exist for each section. The comments explain the section’s provisions in layman’s terms and frequently provide examples. They can be extremely useful in interpreting complicated sections.
How is the UCC Relevant to Business?
The UCC touches many business activities. For example, the title governing the sale of goods (Title 2) is frequently incorporated into agreements and/or used in resolving disputes. The promissory notes and security interests in equipment, accounts receivable, inventory, intellectual property and other collateral taken to secure commercial loans are governed by Titles 3 and 9, respectively, of the UCC. The purchaser of a business needs to investigate whether the bulk sales law found in Title 6 applies to the transaction and if so how to handle its notice and other requirements.
While this is only a brief overview of the Uniform Commercial Code and its implications for businesses, it is important to know that many provisions of the UCC have precise requirements. Ensuring compliance with the applicable law in business dealings is best done with experienced attorneys well-versed in the UCC and other Maryland law. If you have questions about the UCC or other business law or need other legal representation, we urge you to contact us today.