The State of the Uniform Commercial Code 2003 (Part 1 of 2)

A past article in this publication has commented that the continued enactment of revised and new UCC Articles confirms that the UCC as state law remains a viable and attractive alternative to the federalization of commercial law. Unfortunately, this year that observation is open to question. As to the federalization of commercial law, the “Check Clearing for the 21st Century Act” is in Congress and, if enacted, would facilitate the processing of checks but it also would create further interrelational problems with existing UCC Article 4, as well as largely transfer the movement toward the truncation of checks from state law to the federal arena. The Comptroller of the Currency also has proposed an inexcusably ambiguous rule that would preempt state laws that obstruct or condition a national bank\u27s exercise of deposit taking powers, including state laws concerning checking accounts and funds availability, without mention of whether the UCC qualifies or not, thus creating great potential uncertainty. As ill-advised as these and other preemptive efforts may be to our system of federalism, they perhaps can be excused to some extent by increasing doubt that state law as embodied in the UCC can get the necessary job done. Enactments to a degree are stalling out, or are not being obtained uniformly, and efforts are even being frustrated by constituencies that increasingly are centered on maintaining their own positions of self-interest at whatever cost, including the eventual demise of commercial law as state law. The remainder of this section of this article will focus on the experience with the amendments to UCC Articles 1, 3, and 4. Subsequent sections will deal with the amendments to UCC Articles 2, 2A and 7, and look to the future