What Is the Uniform Commercial Code? - Definition & Example

What Is the Uniform Commercial Code? - Definition & Example
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  • 0:04 Uniform Commercial Code
  • 1:12 Applicability of the U.C.C.
  • 1:34 Structure of the U.C.C.
  • 1:58 Example of the U.C.C.…
  • 2:52 Lesson Summary
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Lesson Transcript
Instructor: Jessica Schubert

Jessica is a practicing attorney and has taught law and has a J.D. and LL.M.

After completing this lesson, you will have an understanding of what the Uniform Commercial Code is, its structure and how the Uniform Commercial Code applies to commercial and business transactions.

Uniform Commercial Code

Let's say you own a t-shirt company. You have an agreement to sell 2,000 special order shirts to Emma Company, each bearing the company's unique logo. After shipping the shirts to Emma Company, Emma Company notifies you that they will not accept the special order. You are left with 2,000 unique t-shirts you cannot sell on the open market to just any buyer. Where do you turn for guidance? The Uniform Commercial Code (U.C.C.) provides recommendations as to how this situation will play out.

The Uniform Commercial Code, is a body of laws that applies to commercial and business transactions only. The U.C.C. is a model of laws and therefore is only a guideline of applicable commercial and business transactions laws. Every jurisdiction is free to adopt those portions applicable to their legal issues.

Currently, virtually every state in the U.S. has adopted a portion of the U.C.C. to its legal framework. Ultimately, the aim of the U.C.C. is to streamline the manner in which commercial and business transactions are handled in the U.S. and to provide clarity, simplification, and consistency in these matters.

Applicability of the U.C.C.

The U.C.C. applies to commercial and business transactions. Therefore, the U.C.C. applies to such transactions as:

  • The sale and purchase of goods
  • Commercial paper transactions (for example, banking transactions, letters of credit)
  • Banking deposits
  • Leases
  • Investment securities (such as stocks and bonds)
  • Secured transactions

Structure of the U.C.C.

While the U.C.C. contains model language, it also contains additional sections that help one utilizing the model code. There is a section of commentary, which seeks to describe the particular U.C.C. sections and provide demonstrations of the code in practice. Additionally, there are references to other laws that may provide further explanation for a specific situation, such as references to state laws.

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