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Definition: Uniform Commercial Code
The goal of establishing a uniform commercial code was to harmonize the margins between the wholesalers and the traders across all the territories which could help in fixing prices. The goods covered under UCC are mostly movable goods . It also deals with the extreme situations between traders and merchants and looks to modernise them.
It is mostly applied in the business transactions involving purchase , hire and renting of equipments outside his territory . Other transactions covered in the UCC are borrowing , at the time of entering into contracts , labour union issues .Once a UCC is adopted by the state legislature it is codified as a state law. It also describes the legally permissible ways of demanding money from a defaulter in case your form is in a credit lending business.
Uniform Commercial Codes have two different meanings in two different scenarios.
In case of International Trade, Uniform Commercial code means the documentation standards defined by International Chamber of Commerce (ICC) in 1933. These documentation standards are revised periodically. These documentation standards are also called uniform customs and practice for documentary credit (UCP). Organizations involved in foreign trade follow these standards and are binding on all parties using letters of credit.
Uniform Commercial Code is a “code” or a set of standardized business laws. For example: Say, you are the owner of a steel company. You have orders from a home appliances company. When you have shipped the orders, the company refuses to accept it and cancels the payment. At that time you turn to Uniform Commercial Code for guidance. This law is adopted by most US legislatures to regulate financial contracts, harmonize the law of sales and other commercial transactions. UCC also applies to real estate deals and insurance contract. UCC serves as a “gap filler” providing terms to a transaction where the individual parties have not satisfied their own terms. The goal of harmonizing the laws is for the maintenance of uniformity in the transactions that are beyond one state. The parties can avoid the UCC by specifying their own specific contract terms to govern certain issues.
The code has nine separate articles and each of those articles deal with separate aspect of banking and loans. The UCC enabled the money transactions secured by the borrower’s personal property. A recent addition to the code covers corporate electronic payments.
UCC is applied in:
• the sale and purchase of goods
• commercial paper transactions (for example, banking transactions, letters of credit)
• banking deposits
• investment securities (such as stocks and bonds)