Commercial Code

A commercial code refers to private and public laws that regulated how commerce is to be conducted. Commercial codes govern business and commercial transactions and deal with topics including merchant shipping, corporate contracts, and the manufacture and sale of consumer goods.

All 50 states, the District of Columbia and the U.S. Territories have adopted the Uniform Commercial Code (UCC), a unified body of commercial law that addresses sales and commercial transaction within the United States. The UCC was developed in 1952 as the result of collaboration between the American Law Institute (ALI) and the National Conference of Commissioners on Uniform State Laws (NCCUSL).

It serves to recommend the laws that should be adopted by each of the 50 states and additional U.S. jurisdictions, as a means of standardizing statutes governing commercial activities across the nation. Once a state enacts the UCC, it is codified into that state’s laws. States have the option to adopt the UCC as it is written, or to make changes to it. Forty-nine states, as well as the territories of Guam, the District of Columbia, the Northern Mariana Islands, and the U.S. Virgin Islands, have enacted the UCC with minimal changes; Louisiana, Puerto Rico, and some Native American nations, including the Navajo Nation, have adopted the UCC with some changes. For example, Louisiana and Puerto Rico have opted to retain their traditional civil law statutes governing leases and sales.

The UCC covers primarily those transactions involving personal property and not actual property, such as real estate. Its articles deal with sales; leases; negotiable instruments; funds transfers; bank collections and deposits; bulk sales and transfers; bills of lading, warehouse receipts, and documents of title; investment securities; and secured transactions.

The UCC offers guidelines for the codification of contract formation and repudiation; and grounds for breach of contract and guidelines for what merchants should do in case a contract is breached. The code further discusses the use of personal property as collateral to secure debts, but does not cover interests in real properly such as mortgages, installment land contracts, or deeds of trust.

Most jurisdictions operating under civil law have codifications of commercial law. The Model Tribal Secured Transactions Act provides a model for the codification of secured transactions – debts secured by interest in personal property – for Native American tribes with their own legal systems.