Relates to revising and modernizing the uniform commercial code

Summary of provisions

Section 1 of the bill repeals existing Article 1 of the UCC and enacts a new Article 1 ("General Provisions").

Sections 2 through 13 make technical and clarifying amendments within Article 2 of the UCC.

Sections 14 through 22 make renumbering and clarifying amendments within Article 2-A of the UCC.

Section 23 repeals existing Article 7 of the UCC and enacts a new Article 7 ("Documents of Title").

Sections 24 and 25 make clarifying amendments within Article 8 of the UCC.

Sections 26 through 50 make amendments within Article 9 of the UCC

("Secured Transactions").

Section 51 provides for an immediate effective date, and specifies that it shall apply to transactions entered into on or after such date.

Justification

This bill would modernize three articles of the Uniform Commercial Code (UCC) and bring New York up to date with comparable revisions enacted in other states. Historically, New York has been a leading state for commercial law and this status generates substantial economic activity and employment in the State of New York. Unfortunately, New York has fallen significantly behind its sister states in modernizing its commercial law.

Article 1 contains definitions and concepts which apply to all articles of the UCC and impact every transaction governed by the UCC. Article 1 needs to be updated to reflect the fact that other articles of the UCC have been revised and amended to accommodate changing business practices and developments in the law. About forty states have enacted Revised Article 1 of the UCC and the revision is currently pending in some other states.

Article 7 governs "documents of title," items such as bills of lading and warehouse receipts that control the right to the goods described

therein during commercial storage and shipment. New York's current Article 7 does not recognize electronic documents of title, and therefore does not permit goods covered by electronic documents to be transferred or financed. The revisions to Article 7 are consistent with the increasing recognition of electronic documents and instruments as equal in status to their paper counterparts under both New York and federal law. About forty states have also enacted Revised Article 7 of the UCC and the revision is currently pending in some other states.

Article 9 governs security interest in personal property. The Article was substantially revised and enacted in New York in 2001. The current bill contains targeted amendments (the "Amendments") to Article 9 relating to the rules for the system for filing and searching financing statements, other discrete changes and some transition rules. At least eight states have enacted the 2010 Amendments to Article 9 of the UCC and the amendments are currently pending in several other states.

The National Conference of Commissioners on Uniform State Laws (NCCUSL) has promulgated model revisions for Articles 1 and 7 which completely rewrite these articles of the Uniform Commercial Code. NCCUSL has also promulgated significant amendments for Article 9 of the Uniform Commercial Code. The New York City Bar Association led this effort to revise and update these articles. With a few exceptions, the Article 1 and 7 revisions and the amendments to Article 9 reflect the draft from the Bar.

Enactment of these revisions and amendments will make commercial transactions more predictable and will bring New York Law into accord with many other states.

Fiscal implications

None.

Effective date

Immediate.