Ucc what is it

Last week you shipped twenty custom-made computer controllers to a manufacturer, and they arrived four days ago. Today the manufacturer called you and said she is going to return ten of the controllers because she now realizes she has no use for them.

Also, she will not be paying for those ten controllers. Because the controllers were specially made for the manufacturer's specific needs, you don't see how you can sell them to anyone else. With that in mind, you want to know what your options are in terms of being paid by the manufacturer for all twenty controllers. In these circumstances, you may well turn to the UCC, and more specifically Article 2 on the sale of goods.

Among many other potentially relevant items, Article 2 has rules that will help you determine whether the controllers are, indeed, "goods" covered by the UCC, whether shipping the controllers to the manufacturer constituted a "sale," whether the agreement you had with the manufacturer to produce and sell her the controllers needed to be in writing including whether a written contract is required in the case of custom-made or "specially manufactured" goods , and general guidance about the circumstances under which the manufacturer can try to modify your sales agreement.

While the UCC clearly is often relevant to situations involving business sales contracts, such as in the preceding example, there are also other situations where you may find yourself looking to the UCC. For example, the UCC provides rules for how money should move between businesses, including via banks, both in the form of payments for goods and in the form of loans. These matters are essentially contract issues. The individual sections of the UCC, which state the rules, sometimes can be difficult to understand.

In many cases, it is easier to make sense of the rule by also reading the Official Comment related to the section. The Official Comments are prepared under the authority of the organizations that draft and amend the rules themselves.

They are written in relatively plain English and sometimes will provide concrete, explanatory examples. In short, if you find yourself confused when reading a section of the UCC, a good place to look first for clarification is the Official Comment for that section. This advice applies to state-specific commercial codes.

Each state's commercial code is based on an adoption of the model UCC, so the Official Comment generally is a reliable way to further illuminate a UCC section regardless of what state you're dealing with.

View Article 6, Bulk Sales. Article 7, Documents of Title Uniform Commercial Code Article 7 covers documents of title for personal property, including warehouse receipts, bills of lading, and other documents typically used for commercial trade.

Revised Article 7, approved in , updates the original version to provide a framework for the further development of electronic documents of title, and to update the article in light of state, federal and international legal developments.

View Article 7, Documents of Title. Article 8, Investment Securities Uniform Commercial Code Article 8 provides a modern legal structure for the system of holding securities through intermediaries. The revision sets forth rules concerning the system through which securities are held, specifying the mechanisms by which ownership and other interests in securities are recorded and changed, and setting out some of the rights and duties of the parties who participate in the securities holding system.

View Article 8, Investment Securities. Article 9, Secured Transactions Uniform Commercial Code Article 9 provides a statutory framework that governs secured transactions--transactions that involve the granting of credit secured by personal property.

Each state maintains an office for filing finance statements to publicly disclose security interests in encumbered property. A substantial revision to Article 9 was completed in and adopted in all states. The article was further amended in , , , and View Article 9, Secured Transactions. The Amendments to Article 9 modify the existing statute to respond to filing issues and address other matters that have arisen in practice following a decade of experience with the version.

Most significantly, the Amendments provide greater guidance as to the form of the name of an individual debtor to be provided on a financing statement. View Article 9, Secured Transactions, Amendments to. Contact Us info uniformlaws. Wabash Avenue, Suite Chicago, Illinois Copyright Connect. Get started. Share this. Related Guides. What Types of Contracts Are There? How to Hire an Independent Contractor 5 min read. For example, a recent addition to the code covers corporate electronic payments.

Louisiana is now the only state that has not fully ratified the code, although it has adopted part of it. Each state has the option of adopting the code as it was written and amended or adopting and modifying provisions of it. The state also did not adopt Article 2A, which covers the lease and rental of personal property that is not regarded as real estate. California has made some modifications, too, implementing its own version of the UCC laws.

Personal Finance. Real Estate Investing. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money.