New York takes steps towards modernizing commercial transaction laws
New York provides many opportunities in the business world, but it may lag behind when it comes to commercial transactions and the UCC.
New York offers many progressive opportunities for entrepreneurs, but the laws that govern commercial transactions may lag behind. A recent article in the National Law Review touched on New York’s Uniform Commercial Code (UCC), noting that the state has yet to update various statutes and falls behind the modernized versions of other states.
UCC: The basics.
Essentially, the UCC is the group of laws that govern commercial transactions. In contrast, contracts for employment and other business agreements are governed by common law. The UCC applies for transactions dealing with the sale of goods, leases and borrowing money.
The United States Small Business Administration clarifies that the UCC is not federal law. Instead it is a group of laws put together by the National Conference of Commissioners on Uniform State Laws and the American Law Institute in an effort to provide consistency in the governing of these transactions between the states. Essentially, this code is offered as a suggestion to provide uniformity throughout the country in how states govern these transactions. All states have adopted the UCC in some form, some states have adopted it verbatim while others modify the Code and only adopt portions. New York has only adopted certain portions of the UCC.
UCC: More on the changes.
The UCC is broken down into nine articles. Each article addresses a different type of transaction, like leases, transfer of funds, articles of credit and secured transactions. The National Law Review touched on the changes that apply to the New York UCC, noting the following key points:
- Definitions. Some states chose to modernize terms defined within the UCC. There are notable exceptions to New York’s version. For example, the term “good faith” in Article 1 was not updated to include the definition of “honesty in fact and the observance of reasonable commercial standards of fair dealing.” Instead, New York chose to retain the existing definition of “honesty in fact in the transaction or conduct concerned.” This definition is unique to New York and is referred to as the “honesty in fact” standard. Additional, notable changes include an expansion of the term “security” in Article 8 and ambiguity over the definition of the term “transition.” This ambiguity is projected to cause issues determining which version of the UCC applies to commercial transactions as rules for the transition period were omitted.
- Electronic documents. The modernized UCC also addresses electronic documents of title in Article 7, permitting electronic versions and touching on issues of “control.”
- Secured transactions. Secured transactions are covered in Article 9 of the UCC. New York has mostly adopted the proposed amendments to this article.
These are just a few of the amendments to the UCC. These changes provide an example of the intricacies of commercial transactions. As a result, it is wise for businesses that experience legal issues in matters involving the UCC to seek the counsel of experienced commercial litigation lawyers. These professionals will advocate for your business interests, working to better ensure a more favorable outcome.
Keywords: Business law Commercial transactions UCC