Facilitation and Regulation in the Uniform Commercial Code

Notre Dame Law Review Volume 41 | Issue 5 6-1-1966 Facilitation and Regulation in the Uniform Commercial Code Edward J. Murphy Follow this and additional works at: http://scholarship.law.nd.edu/ndlr Part of the Law Commons Recommended Citation Edward J. Murphy, Facilitation and Regulation in the Uniform Commercial Code, 41 Notre Dame L. Rev. 625 (1966). Available at: http://scholarship.law.nd.edu/ndlr/vol41/iss5/1 This Article is brought to you for free and open access by NDLScholarship. It has been accepted for inclusion in Notre Dame Law Review by an authorized administrator of NDLScholarship. For more information, please contact . Article 1 NOTRE DAME VOL. XLI No. 5 JuNE, 1966 FACILITATION AND REGULATION IN THE. UNIFORM COMMERCIAL CODE EdwardI. Murphy* "It is a big job, and why should anybody get it all under his belt the first time out?" 1 Thus did Chief Draftsman Karl Llewellyn address some New York critics of the Uniform Commercial Code. The pertinence (and perhaps the impertinence) of Professor Llewellyn's cautionary remark will be evident to anyone who has worked with the Code. The statute has no rival in our country in terms of sheer displacement and modification of existing commercial law. It is much more than a mere restatement or an effort "to make uniform the law among the various jurisdictions." 2 The effect of strict application alone will be enormous; possible analogical application adds to the potential impact.' That the draftsmen dealt with many basic questions and did not always follow the path of least resistance is attested by the abundance of literature generated by the Code. Heretofore, much of this writing has been concerned with selling the product or with seeking to block a sale. But since more than forty states have now adopted the statute, with a clean"sweep virtually assured, additional efforts will be made to examine the provisions in various contexts * Member, Illinois Bar; B.S., University of Illinois, 1949; LL.B., University of Illinois, 1951; Professor of Law, University of Notre Dame Law SchooL 1 [19541 1 N.Y. LAw REvisroN COMM'N ANN. REP. 159. 2 UNiFORM COMMERCrAL CODE § 1-102(2) (c). Code language throughout is that -of the 1962 official text. Although the desire for uniformity may have been the principal motive for initiation of the project, the Code being designed to replace seven of the uniform acts prepared by one of the sponsoring organizations, and although the practical value of uniformity may well be the major factor in widespread legislative acceptance, it is clear that normative elements of law improvement are so dominant as to result in a considerable reorientation -of legal doctrine. See, e.g., King, The New Conceptualism of the Uniform Commercial Code 10 ST. Lours U.L.J. 30 (1965); Mentschikoff, Highlights of the Uniform Commercial Code, 27 MODERN L. REv. 167 '(1964); Mooney, Old Kontract Principles and Karl's New Kode: An Essay on the jurisprudence of Our New Commercial Law, 11 VLL. L. Rxv. 213 (1966). 3 Collins, Contracts, in 1961 ANN. SURVEY AM. L. 243; Murphy, Book Review, 37 Nomz' DAM E LAWYER 465 (1962); Note, 65 COLuM. L. Rv. 880 (1965). The extent to which the. Code is likely to be influential as a prestigious model for structuring general doctrine can be perceived, for example, in the initial draft of the committee currently revising the Restatement, of Contracts. See RESTATEMENT (SECOND), CONTRACTS (Tent. Draft No. 1, 1964). NOTRE DAME LAWYER and from different perspectives. I propose to examine the extent to which Code rules and principles facilitate private autonomy, distinguishing such facilitation from a regulatory approach which assigns rights and duties irrespective of private agreement. Obviously, if one is intent upon prospecting for commercial law cast in a regulatory mode, calculated to subordinate private choice to collective goals or policies of legislative origin, there are more promising fields than the Uniform Commercial Code. The Code does not appear to be a regulatory measure at all, certainly not in the sense of the typical insurance code or labor relations statute.4 No one gainsays that the multitudinous legislative measures of the latter type limit private autonomy; that is precisely what they are designed to do. No comparable intention has been imputed to bodies in adopting the Code, the Code dealing, in the main, with matters still left within the domain of private agreement. If such a purpose is discernible in some Code provisions, it would be all the more significant in the light of avowed purpose. Analyzing the varying types of economic promises which are made and kept, economist Harry Scherman made this observation: "I do not think there is any single fact more important for men to recognize, with all its implications, their individual well-being, as well as that of the than this simple one -that whole society, is determined by the volume of exchanges going on in the whole society." (All italicized in original.) 5 Whatever the merits of this as a statement of universal principle, there can be no doubting that it is a presupposition upon which the bulk of our traditional commercial law is predicated. Whether derived from common law or statutory sources, this area of law is designed primarily to protect and promote commercial exchange. The Uniform Commercial Code is not an exception. Section 1-102(2) states its "underlying purposes and policies": Underlying purposes and policies of this Act are (a) to simplify, clarify and modernize the law governing commercial transactions; (b) to permit the continued expansion of commercial practices through custom, usage and agreement of the parties; (c)- to make uniform the law among the various jurisdictions. 4 There is extensive legislative activity in the area of consumer protection, for instance, most of it providing for regulation through administrative agencies. On the federal level there is; notably, the Federal Trade Commission Act of 1914, 38 Stat. 717 '(1914), as amended, 15 U.S.C. §§ 41-58 (1964), and-the Federal Food, Drug and Cosmetic Act of 1938, 52 Stat. 1040 (1938), as amended, 21 U.S.C. §§ 301-92 (1964). Far-reaching "truth in packaging" and "truth in lending" bills are now pending in Congress. See, e.g., S. 985, 89th Gong., 1st Sess. (1965) (packaging); S. 2275, 89th Cong., 1st Sess. (1965); (lending; for text see 111 CONG. Rie. 15848 (daily ed. July 12, 1965)). Many states, as well, have legislation of compaiable import,' including, in particular, consumer credit and disclosure statutes. See Note, Economic Institutions and Value Survey: The Consumer in the Marketplace-A Survey of the Law of Informed Buying, 38 NOTRE DAME LAWYER 555 (1963). 5 SCHERMAN, THE PROMISES MEN LivE By 393 '(1938). FACILITATION AND REGULATION IN THE COMMERCIAL CODE 627 It is noteworthy that the desired "expansion of commercial practices" is to be accomplished through "agreement of the parties." This suggests another bedrock concept tr (...truncated)