CYIL 2012

LARRY A. DĎMATTEO CYIL 3 ȍ2012Ȏ 2.1 Revising and Updating Commercial Codes: The American Experience The American UCC consists of nine major parts, along with some subparts. The main parts include separate rules for sales of goods (Article 2), negotiable instruments (commercial paper) (Article 3), bank deposits and collections (Article 4), letters of credit (Article 5), bulk transfers (Article 6), documents of title and bills of lading (Article 7), investment securities (Article 8), and secured transactions (Article 9). The subparts include Article 2A (leasing of goods) and Article 4A (funds transfers). The subparts represent the UCC’s continuing process to modernize in the 1980s the leasing of goods became popular and the response was the enactment of Article 2A. Later, wire transfers became prevalent and thus, the enactment of Article 4A followed. As important, many of the core Articles have been revised and updated to keep abreast of changes in the business world. Most recently, Article 9’s coverage of secured transactions was substantially revised and went into effect in all fifty American states on July 1, 2001. Revised Article 9 expanded the definition of collateral to include commercial tort claims, letter of credit rights, as well as health care receivables. Interestingly, the UCC revision and amendment process failed to respond to the 1990s phenomenon of moving away from the sale and leasing of goods to the licensing of goods. This trend was largely due to the creation of new technological and informational products. The ability of American law to update and harmonize its commercial laws is due to the existence of two sponsoring institutions of the UCC the American Law Institute (ALI) 11 and the National Conference of Commissioners on Uniform State Laws (NCCUSL). 12 NCCUSL is a quasi-government institution made up of commissioners appointed by each American state. It traces its origins back to 1888. The ALI is a private organization made up of 4,000 legal scholars, judges and legal practitioners. Its mission is producing scholarly work to clarify, modernize, and otherwise improve the law. It was founded in 1923. The ability of fifty independent jurisdictions (states) to harmonize and modernize American commercial law is due to the existence of these two longstanding institutions. This helps explain the efficiency of the law adoption and revision process in the US versus the EU and its Member States. The private law harmonization movement in the EU is still in its infancy, while the American harmonization of commercial law traces itself back to the late19 th century. The modernization of Czech commercial law is also relatively new given its recent transition from a socialist to a free-market law system. Finally, EU private law harmonization, most recently represented by CESL, takes place within the context of different types of legal systems (civil versus common law), variations within a given type of system (Franco-Germanic); and vast differences in economic wealth and development, as well as differences in legal jurisprudence and court systems, in its twenty-seven Member States. Thus, the job of harmonizing, modernizing, and continuously revising EU commercial law is a much more difficult proposition than was the case in the US. CESL, if enacted, will be a test case of 11 See http://www.ali.org. 12 See http://www.uniformlaws.org.

210