UNIFORM COMMERCIAL CODE: Article 1 & Article 2

The law of the place where the bank is located governs. In the case of action or non-action by or at a branch or separate office of a bank, its liability is governed by the law of the place where the branch or separate office is located. UCC Article 5 applies to letters of credit and to certain rights and obligations arising out of transactions involving letters of credit. UCC Article 6 applies to bulk sales auctions and liquidations of assets. UCC Article 7 deals with storage and bailment of goods.

Articles of the UCC

UCC Article 8 applies to a share or similar equity interest issued by an entity that is registered as an investment company under the federal investment company laws, an interest in a unit investment trust that is so registered, or a face-amount certificate issued by a face-amount certificate company that is so registered. An investment company security does not include an insurance policy or endowment policy or annuity contract issued by an insurance company.

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However, interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this article does not apply. The Uniform Commercial Code deals with the following subjects under consecutively numbered Articles: UCC Article 1 Art. UCC Article 2 Art.

UCC Article 3 Art. UCC Article 4 Art. UCC Article 5 Art. UCC Article 6 Art. UCC Article 7 Art. UCC Article 8 Art. At this point, if offeree's terms cannot coexist with offeror's terms, both terms are "knocked out" and UCC gap-fillers step in. If offeree's terms are simply additional, they will be considered part of the contract unless a the offeror expressly limits acceptance to the terms of the original offer, b the new terms materially alter the original offer or c notification of objection to the new terms has already been given or is given within a reasonable time after they are promulgated by the offeree.

Articles of the UCC – Uniform Commercial Code

Because of the massive confusion engendered by Section , a revised version was promulgated in , but the revision has never been enacted by any state. This Article 8, a text of about thirty pages, [20] underwent important recasting in That update of the UCC treats the majority of the transfers of dematerialized securities as mere reflections of their respective initial issue registered by the two American central securities depositories , respectively the Depository Trust Company DTC for the securities issued by corporations and the Federal Reserve for the securities issued by the Treasury Department.

In this centralised system, the title transfer of the securities does not take place at the time of the registration on the account of the investor, but within the systems managed by the DTC or by the Federal Reserve. The consequence for an investor is that proving ownership of its securities relies entirely on the accurate replication of the transfer recorded by the DTC and FED at the lower tiers of the holding chain of the securities.

Each one of these links is composed respectively of an account provider or intermediary and of an account holder.

The rights created through these links, are purely contractual claims: This decomposition of the rights organized by Article 8 of the UCC results in preventing the investor to revindicate the security in case of bankruptcy of the account provider, that is to say the possibility to claim the security as its own asset, without being obliged to share it at its prorate value with the other creditors of the account provider.

As a consequence, it also prevents the investor from asserting its securities at the upper level of the holding chain, either up to the DTC or up to a sub-custodian. Such a "security entitlement," unlike a normal ownership right, is no longer enforceable " erga omnes " to any person supposed to have the security in its custody. The "security entitlement" is a mere relative right, therefore a contractual right.

This re-characterization of the proprietary right into a simple contractual right may enable the account provider, to "re-use" the security without having to ask for the authorization of the investor. This is especially possible within the framework of temporary operations such as security lending , option to repurchase , buy to sell back or repurchase agreement.

This system the distinction between the downward holding chain which traces the way in which the security was subscribed by the investor and the horizontal and ascending chains which trace the way in which the security has been transferred or sub-deposited.

Inside Articles of the UCC

Contrary to claims suggesting that Article 8 denies American investors their security rights held through intermediaries such as banks, Article 8 has also helped US negotiators during the negotiations of the Geneva Securities Convention, also known as the Unidroit convention on substantive rules for intermediated securities. Article 9 governs security interests in personal property as collateral to secure a debt.

A creditor with a security interest is called a secured party. Fundamental concepts under Article 9 include how a security interest is created called attachment ; how to give notice of a security interest to the public, which makes the security interest enforceable against others who may claim an interest in the collateral called perfection ; when multiple claims to the same collateral exist, determining which interests prevail over others called priority ; and what remedies a secured party has if the debtor defaults in payment or performance of the secured obligation. Article 9 does not govern security interests in real property, except fixtures to real property.

Security interests in real property include mortgages , deeds of trusts , and installment land contracts. There may be significant legal issues around security interests in Bitcoin. The obligee which is the debtor shall return all assets stated in the collateral to secured party after the perfection of default by secured party in response to protest by the Obligee within specified time frame in the civil code and UCC Article Article 5, governing letters of credit , has been influential in international trade finance simply because so many major financial institutions operate in New York.

Article 9, which established a unified framework for security interests in personal property, directly inspired the enactment of Personal Property Security Acts in every Canadian province and territory except Quebec from onwards, followed by New Zealand 's Personal Property Securities Act and the Australian Personal Property Securities Act of From Wikipedia, the free encyclopedia.

Secured transactions in the United States. Kidwell; William Whitford Teaching Materials on Commercial and Consumer Law 3rd ed. Retrieved 27 November Retrieved from " https: Views Read Edit View history.

Uniform Commercial Code

This page was last edited on 18 November , at By using this site, you agree to the Terms of Use and Privacy Policy. Definitions, rules of interpretation. Promissory notes and drafts commercial paper. Transactions involving letters of credit. Auctions and liquidations of assets. Storage and bailment of goods.

Securities and financial assets. Transactions secured by security interests. Part of the common law series. Offer and acceptance Posting rule Mirror image rule Invitation to treat Firm offer Consideration Implication-in-fact Collateral contract. Parol evidence rule Contract of adhesion Integration clause Contra proferentem. Privity of contract Assignment Delegation Novation Third-party beneficiary. Specific performance Liquidated damages Penal damages Rescission.

Promissory estoppel Quantum meruit. Conflict of laws Commercial law. Tort law Property law Wills , trusts , and estates Criminal law Evidence.