What You Need to Know About The Uniform Commercial Code Background

The Uniform Commercial Code was first published in 1952. These uniform commercial codes represented an attempt to provide an increasingly interconnected system of interstate commerce with a more uniform legal system to govern these interactions.

Uniform commercial codes became more essential as it be came commonplace for a single transaction to involve goods which may have produced in Minnesota, stored in a warehouse in Illinois, purchased by a company headquartered in Texas, and delivered to a store from in Maine. Besides involving the transfer of ownership in each of these jurisdictions, the goods in this example would have also been affected by the laws of several jurisdictions while in transit.

Before the development of the Uniform Commercial Code, the transaction above could have been subjected to as many as fifteen separate and distinct instances of taxes. Taxes for goods crossing intra-national borders contributed to rising sales prices. The development of uniform commercial codes were seen as an attempt to keep prices under control within the United States, and to promote domestic production and consumption of American goods. The Uniform Commercial Code is not a law in and of itself.

Instead it is meant to serve as a guide for individual states seeking to devise their own commercial laws. The Uniform Commercial Code may be adopted exactly as they are written, or may be adapted so as to be in accord with the individual traditions of the state. Unless the changes are very minor, the goal of establishing a set of uniform commercial codes will be defeated.

California has enacted the uniform commercial codes with only a minor change. The Uniform Commercial Code exchanges the word "article" for the word "division," in order to maintain its normal naming structure for its codes. California also uses a different punctuation system for the uniform commercial codes, because while the Uniform Commercial Code uses hyphens to denote section numbers, California law codes only permit the use of hyphens to denote instances when a succession of laws are being discussed.

California does not provide an alternate punctuation, electing to simply drop the hyphens. Arkansas substitutes "chapters" for "articles," since articles are only used in that state to refer to sections of the state Constitution.

When the time came to adopt the Uniform Commercial Code, Louisiana made substantial changes to the uniform commercial codes, which prevents the Code from having truly universal adoption. It made the same minor change that Arkansas did, renaming "articles" as "chapters." However, it also elected to make a more substantial change: Louisiana decided against adopting Article Two in favor of continuing its civil law tradition in regards to selling goods. It has, however, adopted to other ten universal commercial codes.

NEXT: Where Can I Find Sample Contract Forms?