As a business owner, you may not be familiar with the Uniform Commercial Code (UCC), but it can affect your operations and lead to time-consuming and expensive disputes. If your business buys and sells goods, borrows money, leases equipment or uses checks or similar payments, the UCC will likely apply.
UCC overview
The UCC is a set of laws that governs commercial transactions. Every state has adopted some or all of the UCC and made it part of their state laws. This is helpful to businesses that operate in multiple states because the guidelines remain the same from one state to the next.
Specifically, the UCC governs the sale of goods, including warranties, deliveries and payments, secured transactions that provide rules about securing personal property interests, and negotiable instruments like checks.
It also addresses leasing transactions, provides guidance for forming and interpreting contracts, and outlines expectations for business parties, like good faith and fair dealing.
Potential disputes and resolution
Many disputes can arise under the UCC. These include a breach of contract with the sale of goods or secured transactions, disputes about the quality of the goods received, whether there was a breach of warranties, and concerns that payments are fraudulent or forged.
There can also be disputes about the contract form, such as its terms and whether the proper offer and acceptance were present, as well as when there are delivery issues or disagreements about whether goods were accepted.
You may be able to resolve the dispute through negotiations with the other party. More often, however, UCC disputes are resolved through the court process. The judge will review the evidence and make a binding decision.