Reference no: EM132308474

The Uniform Commercial Code (UCC) represent several acts in the United States that have been put together in order to harmonize the practice of commercial law across the country. If you are going trade and/or do business you need to be very aware of this Code. Article 2 covers transaction in goods—it does not apply to security transaction. Article 3 refers to negotiable instruments such as checks, the negotiation of and endorsement of instruments, etc. Article 4A has to do with the transfer of funds. Article 9 has to do with secured transactions—I purchase a car and the bank is holding the car using a security of your house, or land, or your credit. It governs the perfection and priority of a transaction. If you purchase something from me, for example land, I will hold something in security for that land, for example your house, but if I do not record it first an quickly at the court house, someone else can record it before me and they would have certain rights to it (a priority). Secured transactions have a higher priority than unsecured transactions. A credit line is an unsecured transaction, but a house is not. If you go bankrupt, the credit card company may use what they lent you, but if it is a house, the bank will take your house. I can attach your property if you owe me and gain an interest it. When I was president of Atlantic Union College in Massachusetts, we helped faculty members purchase home by purchasing a secured interest in the house—we gave them each $14,000 and they paid us back. We recorded the transaction at the courthouse. When they sold the house, we got back our $14,000 plus interest, because we were a secured party. We were first in place and first in time. That is we had a priority-we were ahead of all others when it came to making a claim. If they made a profit when they sold the house, that percentage of our input gained an increase, but if they made a loss, we did not take the loss--we just wanted our deposit back.