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General Provisions of the UCC, Part 1 | Nolo.com
Legal TopicsBusiness Formation: LLCs & CorporationsBusiness ContractsUniform Commercial Code (“UCC”)
General Provisions of the UCC, Part 1
An overview of Part 1 of the UCC which addresses how the UCC should be interpreted and applied.
Article 1 of the Uniform Commercial Code (the "UCC") is entitled "General Provisions" and is divided into three Parts. Part 1 of Article 1 has the same title as Article 1 itself: General Provisions. We cover the current version of the model UCC in this article. Not all states have adopted this version and the model UCC specifically leaves it to individual states to determine the precise wording of certain sections. Therefore, you should check your own state’s commercial code for the most accurate information about your state's UCC laws.
Part 1 of Article 1 states that the rules contained in the UCC “must be liberally construed and applied to promote its underlying purposes and policies.” It's important to bear in mind that this section indicates that the UCC’s rules should be interpreted flexibly by individual courts in order to adequately address new and unusual situations as they arise.
In addition, this section states that rules and principles of law contained in court opinions or common law, including elements of contract law, that are not specifically covered by the UCC will supplement the UCC rules. Thus, for example, if your state has case law regarding signing a business contract under duress that extends beyond what is stated in the UCC, you should expect that the case law will apply in addition to the more general rules on duress contained in the UCC.
This section also states that individual bits and pieces of the UCC are “severable.” In other words, if a state court or state legislature were to find that a word, clause, section, or other portion of the UCC were for some reason invalid, the rest of the UCC would remain valid to the maximum extent possible in the absence of the invalidated provision.
Finally, Part 1 includes a section on electronic signatures. With the advent of both computerization and the Internet, it is now possible in many business transactions to “sign” a contract electronically. UCC Section 1-108 is intended to accommodate that reality. The section generally “modifies, limits, and supersedes” the relevant federal law on electronic signatures—commonly known as “E-SIGN”—which, in many circumstances, permits the use of electronic signatures. However, UCC Section 1-108 specifically does not supersede two sections of the E-SIGN law. One of those sections states that a consumer may be provided with certain information about transactions in electronic format if the consumer previously consented to receiving information in that format. The other section relates to the requirement that certain documents, generally not directly related to business transactions, may not be in electronic form. These include documents related to court orders and other official court documents, and certain notices, such as for cancellation of utility services or health insurance, or a product recall related to health or safety. (For full details on the relevant parts of E-SIGN, check 15 U.S.C. 7001(c) and 15 U.S.C. 7003(b).)
Part 1 contains several other sections not covered in this brief overview. For a complete list of sections in Part 1, you should check online for the model UCC or your state’s version of the UCC. For information on the other Parts of UCC Article 1, as well as other UCC Articles, check Nolo’s section on the UCC.