An Essay on Horseless Carriages and Paperless Negotiable Instruments: Some Lessons from the Article 8 Revision

As practices change, so too must the language and concepts that define and describe them. That is the lesson to be drawn from the past few decades’ work on the commercial law of investment securities. Article 8 is the first article of the Uniform Commercial Code to reach a third generation. There is the original version, the 1978 version, and now the 1994 version. The original version was based on the traditional system in which buyers and sellers effected transfer of securities by physical delivery of certificates. The 1978 version added new provisions dealing with “uncertificated securities.” Then the 1994 version recast the law to deal more adequately with the system of securities holding through intermediaries. In this essay, the author argues that as significant legal objects change, so too must the legal language affiliated with those objects. Just as a car is not really a horseless carriage, a securities position recorded electronically is not really an electronic certificate