Law Commons^™

Emerging Technology's Unfamiliarity With Commercial Law, Carla L. Reyes

Faculty Journal Articles and Book Chapters

Over the course of a three-year, collaborative process that was open to the public, the Uniform Law Commission (ULC) and the American Law Institute (ALI) undertook a project to revise the Uniform Commercial Code (UCC) to account for the impact of emerging technologies on commercial transactions. The amendments, approved jointly by the ULC and ALI in July 2022, touch on aspects of the entire UCC, but one change has inspired ire and attracted national media attention: a proposed revision to the definition of “money.” The 2022 UCC Amendments alter the definition of “money” to account for the introduction of central …

Teaching Slavery In Commercial Law, Carliss N. Chatman

Scholarly Articles

Public status shapes private ordering. Personhood status, conferred or acknowledged by the state, determines whether one is a party to or the object of a contract. For much of our nation’s history, the law deemed all persons of African descent to have a limited status, if given personhood at all. The property and partial personhood status of African-Americans, combined with standards developed to facilitate the growth of the international commodities market for products including cotton, contributed to the current beliefs of business investors and even how communities of color are still governed and supported. The impact of that shift in …

Crypto In Real Estate Finance, R. Wilson Freyermuth, Christopher K. Odinet, Andrea Tosato

Faculty Publications

Blockchain and cryptocurrencies have ushered in a digital gold rush. But all that glitters is not gold. The latest fad is the use of non-fungible tokens (NFTs) to purchase and finance real estate. Typically, crypto real estate transactions begin with the transfer of title for a residential property into a dedicated business entity, such as a limited liability company. Thereafter, an NFT is ‘minted’ and used to represent the ownership interest in that entity. The real property is then marketed online specifying that, to acquire it, one simply purchases the relevant NFT via a blockchain transfer. Crucially, buyers are expected …

Secured Transactions Law Reform In Japan: Japan Business Credit Project Assessment Of Interviews And Tentative Policy Proposals, Megumi Hara, Kumiko Koens, Charles W. Mooney Jr.

All Faculty Scholarship

This article summarizes key findings from the Japan Business Credit Project (JBCP), which involved more than 30 semi-structured interviews conducted in Japan from 2016 through 2018. It was inspired by important and previously unexplored questions concerning secured financing of movables (business equipment and inventory) and claims (receivables)—“asset-based lending” or “ABL.” Why is the use of ABL in Japan so limited? What are the principal obstacles and disincentives to the use of ABL in Japan? The interviews were primarily with staff of banks, but also included those of government officials and regulators, academics, and law practitioners. The article proposes reforms of …

Law Library Blog (October 2021): Legal Beagle's Blog Archive, Roger Williams University School Of Law

Law Library Newsletters/Blog

No abstract provided.

Blockchain & Secured Transactions Proceedings Of The 2021 Spring Conference: The Impact Of Blockchain On The Practice Of Law: Presentation 4, Heather Hughes

Articles in Law Reviews & Other Academic Journals

Secured transactions are governed by Uniform Commercial Code Article 9. UCC Article 9 governs any extension of credit secured by personalty. If you think about it, this statute governs a massive swath of market activity: secured credit facilities, margin trading of securities, asset securitizations, and purchase money transactions for goods, I could name more. But it's a statute that's very wide ranging. Given this expansive scope, blockchain-based transaction platforms have numerous implications for lawyers who deal with secured transactions. In my brief time here, I'm going to identify just two of them.

The Uniform Commercial Code Survey: Introduction, Jennifer S. Martin, Colin P. Marks, Wayne Barnes

Faculty Articles

The survey that follows highlights the most important developments of 2020 dealing with domestic and international sales of goods, personal property leases, payments letters of credit, documents of title, investment securities, and secured transactions.

When Is A Warranty Not A Warranty?: Deconstructing The Magnuson-Moss Warranty Act’S Narrow Definition Of “Warranty”, Colin P. Marks

Faculty Articles

Prior to the adoption of the Uniform Commercial Code (“UCC”), warranties of goods required reliance on the affirmation or promise relating to the goods for liability to attach. The UCC changed this standard from a reliance standard to a “basis of the bargain” standard. This shift has caused much confusion as to whether the new standard was meant to completely eliminate reliance as a relevant factor, or if reliance still plays a primary role in warranty analysis. Adding to this area of law is the Magnuson-Moss Warranty Act (“MMWA” or “the Act”), which was enacted to address concerns that sellers’ …

Creating Cryptolaw For The Uniform Commercial Code, Carla L. Reyes

Faculty Journal Articles and Book Chapters

A contract generally only binds its parties. Security agreements, which create a security interest in specific personal property, stand out as a glaring exception to this rule. Under certain conditions, security interests not only bind the creditor and debtor, but also third-party creditors seeking to lend against the same collateral. To receive this extraordinary benefit, creditors must put the world on notice, usually by filing a financing statement with the state in which the debtor is located. Unfortunately, the Uniform Commercial Code (U.C.C.) Article 9 filing system fails to provide actual notice to interested parties and introduces risk of heavy …

Commercial Law Intersections, Giuliano Castellano, Andrea Tosato

All Faculty Scholarship

Commercial law is not a single, monolithic entity. It has grown into a dense thicket of subject-specific branches that govern a broad range of transactions and corporate actions. When one of these events falls concurrently within the purview of two or more of these commercial law branches - such as corporate law, intellectual property law, secured transactions law, conduct and prudential regulation - an overlap materializes. We refer to this legal phenomenon as a commercial law intersection (CLI). Some notable examples of transactions that feature CLIs include bank loans secured by shares, supply chain financing arrangements, patent cross-licensing, and blockchain-based …

The Economics Of Leasing, Thomas W. Merrill

Faculty Scholarship

Leasing may be the most important legal institution that has received virtually no systematic scholarly attention. Real property leasing is familiar in the context of residential tenancies. But it is also widely used in commercial contexts, including office buildings and shopping centers. Personal property leasing, which was rarely encountered before World War II, has more recently exploded on a world-wide basis, with everything from autos to farm equipment to airplanes being leased. This article seeks to develop a composite picture of the defining features of leases and why leasing is such a widespread and highly successful economic institution. The reasons …

Disrupting Secured Transactions, Christopher G. Bradley

Law Faculty Scholarly Articles

Article 9 of the Uniform Commercial Code (UCC) governs secured transactions in personal property in all fifty states and has been lauded as “the most successful commercial statute ever.” But while Article 9 has facilitated commerce and economic growth, it remains complicated and inefficient in numerous respects. Its weaknesses are well known but have been considered necessary evils, accepted because no better approaches were available. But just as the UCC was motivated initially by the idea of streamlining the law to accommodate modern commerce, now that goal should motivate revision of the UCC itself.

This Article proposes to remove and …

Fraud, Letters Of Credit, And The Uniform Commercial Code: It Is Time To Untether The Independence Principle, Richard Flint

Faculty Articles

The purpose of this Article is to evaluate the efficacy of the fraud exception to the independence principle in letters of credit law in the case of both commercial and standby letters of credit. In doing so, a primary focus will be to identify which of the various parties to a letter of credit transaction the present fraud exception "protects" and to evaluate the policy justifications for why these persons are viewed by the law to be eligible recipients of protection.

Three Against Two: On The Difference Between Property And Contract And The Example Of Deposit Accounts In Bankruptcy, Jeanne L. Schroeder, David G. Carlson

Articles

In Citizen's Bank v. Strumpf (1995), Justice Scalia announced that deposit accounts are not "property". Five years later, the Uniform Commercial Code was amended to make deposit accounts collateral for the depositary bank maintaining the account, thereby crowding the field previously occupied by the common law right of setoff. Security interests attach to personal "property." Security interests attach to deposit accounts. Deposit accounts, by syllogistic logic, are property. Does this mean that the UCC has overruled the Supreme Court? We argue not. A deposit account is a mere contract in the two-person universe that contract law presupposes. A deposit account …

Social Justice And Deposit Return Calculations: A Study Of Success And Failure In Commercial Law Reform, William H. Widen

Articles

No abstract provided.

Commodifying Consumer Data In The Era Of The Internet Of Things, Stacy-Ann Elvy

Articles & Chapters

Internet of Things (“IOT”) products generate a wealth of data about consumers that was never before widely and easily accessible to companies. Examples include biometric and health-related data, such as fingerprint patterns, heart rates and calories burned. This Article explores the connection between the types of data generated by the IOT and the financial frameworks of Article 9 of the Uniform Commercial Code and the Bankruptcy Code. It critiques these regimes, which enable the commodification of consumer data, as well as laws aimed at protecting consumer data, such as the Bankruptcy Abuse Prevention and Consumer Protection Act, various state biometric …

Hybrid Transactions And The Internet Of Things: Goods, Services, Or Software?, Stacy-Ann Elvy

Articles & Chapters

The Internet of Things (IOT) has been described by the American Bar Association as "one of the fastest emerging," potentially most "transformative and disruptive technological developments" in recent years. Thesecurity risks posed by the IOT are immense and Article 2 of the UCC should play a central role in determinations regarding liability for vulnerable IOT products. However, the lack of explicit clarity in the UCC on how to evaluate Article 2's applicability to hybrid transactions that involve the provision of goods, services, and software has led to conflicting case law on this issue, which contradicts the UCC's stated goals of …

Security Interests In Book-Entry Securities In Japan: Should Japanese Law Embrace Perfection By Control Agreement And Security Interests In Securities Accounts?, Kumiko Koens, Charles W. Mooney Jr.

All Faculty Scholarship

The paper proposes two significant modifications of Japan’s Act on Transfer of Bonds, Shares, etc. (BETA). First, it suggests the control agreement method of transferring an interest in securities that is effective against third parties. Under the BETA, the creation of an effective interest in book-entry securities requires book entries in the securities accounts of the transferor and the transferee. Under the control agreement approach, the transferor, transferee, and the transferor’s securities intermediary would agree that (i) the intermediary would act on the instructions of the transferee with respect to securities credited to the transferor’s securities account or (ii) the …

Conceptualizing Cryptolaw, Carla L. Reyes

Faculty Journal Articles and Book Chapters

Sweden transfers its real property recording system to the blockchain, a software protocol that enables public, cryptographically secure transaction verification without reliance upon a trusted third party. Dubai plans to issue blockchain-based government documents. The United States Department of Health and Human Services investigates blockchain-based systems for managing health data. Illinois explores blockchain-based applications for use in the Illinois government. News of governments and public-private partnerships developing blockchain-based legal applications increasingly splash across the headlines; however the law-makers using blockchain and other Distributed Ledger Technology (DLT) systems to implement legal processes do not systematically consider the broader implications of their …

Contracting In The Age Of The Internet Of Things: Article 2 Of The Ucc And Beyond, Stacy-Ann Elvy

Articles & Chapters

This Article analyzes the global phenomenon of the Internet of Things (“IOT”) and its potential impact on consumer contracts for the sale of goods. Recent examples of IOT products include Amazon’s Dash Replenishment Service, which allows household devices to automatically reorder goods. By 2025, the IOT is estimated to have an economic impact of as much as $11.1 trillion. To date, there are approximately fifteen billion interconnected devices, and by 2020, there will be fifty billion such devices worldwide. IOT devices will revolutionize the way that consumers shop for consumable supplies and other goods. Consumers will no longer need to …

Bitcoin And The Uniform Commercial Code, Jeanne L. Schroeder

Articles

Much of the discussion of bitcoin in the popular press has concentrated on its status as a currency. Putting aside a vocal minority of radical libertarians and anarchists, however, many bitcoin enthusiasts are concentrating on how its underlying technology – the blockchain – can be put to use for wide variety of uses. For example, economists at the Fed and other central banks have suggested that they should encourage the evolution of bitcoin’s blockchain protocol which might allow financial transactions to clear much efficiently than under our current systems. As such, it also holds out the possibility of becoming that …

Delaware’S Implied Contractual Covenant Of Good Faith And “Sibling Rivalry” Among Equity Holders, Daniel S. Kleinberger

Faculty Scholarship

An obligation of good faith and fair dealing is implied in every common law contract and is codified in the Uniform Commercial Code (“U.C.C”). The terminology differs: Some jurisdictions refer to an “implied covenant;” others to an “implied contractual obligation;” still others to an “implied duty.” But whatever the label, the concept is understood by the vast majority of U.S. lawyers as a matter of commercial rather than entity law. And, to the vast majority of corporate lawyers, “good faith” does not mean contract law but rather conjures up an important aspect of a corporate director’s duty of loyalty.

Nonetheless, …

Are Government Creditors Exempt From U.C.C. Article 9 Filing And Perfection Requirements?, Thomas Sica

Bankruptcy Research Library

(Excerpt)

Article 9 of the Uniform Commercial Code (the “UCC”) requires a creditor to perfect its security interests against its collateral in order to recover the creditor’s priority in such collateral. Former versions of the UCC that predate 2001 provided that the Article 9’s perfection requirements did not apply “[t]o a transfer by a government or a governmental unit of the state.” This exception was eliminated from the UCC in 2001. Thirty-two states, however, still have versions of the UCC that contain some version of this exception. Within the states that still enforce this exception for governmental units, there are …

Contract Resurrected! Contract Formation: Common Law – Ucc – Cisg, Sarah Howard Jenkins

Faculty Scholarship

No abstract provided.

'Sophisticated Robots': Balancing Liability, Regulation, And Innovation, F. Patrick Hubbard

Faculty Publications

Our lives are being transformed by large mobile “sophisticated robots” with increasingly higher levels of autonomy, intelligence, and interconnectivity among themselves. For example, driverless automobiles are likely to become commercially available within a decade. Many people who suffer physical injuries from these robots will seek legal redress for their injury, and regulatory schemes are likely to impose requirements to reduce the number and severity of injuries.

This Article addresses the issue of whether the current liability and regulatory systems provide a fair, efficient method for balancing the concern for physical safety against the need to incentivize the innovation necessary to …

Introduction-Papers From The 2013 American Society Of Comparative Law Annual Meeting, Sarah Howard Jenkins, Kenneth S. Gallant

Faculty Scholarship

No abstract provided.

When Is A Dog’S Tail Not A Leg?: A Property-Based Methodology For Distinguishing Sales Of Receivables From Security Interests That Secure An Obligation, Steven L. Harris, Charles W. Mooney Jr.

All Faculty Scholarship

There are two principal ways in which a firm that is owed money payable in the future but needs the money now may use its rights to payment (“receivables”) to obtain the needed financing. It might sell its receivables, or it might borrow and use the receivables as collateral to secure the loan. Different legal consequences follow depending on whether the transaction is a true sale or is a security interest that secures an obligation (a “SISO”).

These legal consequences are particularly salient when the firm enters bankruptcy. If the transaction is a sale, then the buyer can collect the …

U.C.C. Article 9, Filing-Based Authority, And Fundamental Property Principles: A Reply To Professor Plank, Steven L. Harris, Charles W. Mooney Jr.

All Faculty Scholarship

Uniform Commercial Code Article 9 generally follows the common-law principle that one cannot give rights in property that one does not have (nemo dat quod non habet). In many circumstances, however, Article 9’s priority rules, including its rule awarding priority to the first security interest that is perfected or as to which a financing statement has been filed, trump nemo dat and enable a debtor to grant a senior security interest in property that the debtor previously had encumbered. In this article, Professors Steven Harris and Charles Mooney argue that, properly understood, the first-to-file-or-perfect rule confers upon a debtor the …

Turnover Actions And The “Floating Check” Controversy, David R. Hague

Faculty Articles

When a debtor files for Chapter 7 bankruptcy, a Chapter 7 trustee is appointed and is charged with collecting and reducing to money the property of the bankruptcy estate. One of the most basic collection methods a trustee possesses is its turnover power under § 542(a) of the Bankruptcy Code. Pursuant to § 542(a), an entity in possession, custody, or control, during the bankruptcy case, of property that the trustee may use, sell, or lease, must deliver to the trustee, and account for, such property or the value of such property.

An interesting issue has arisen that is placing debtors …

Fifty: Shades Of Grey--Uncertainty About Extrinsic Evidence And Parol Evidence After All These Ucc Years, David G. Epstein

Law Faculty Publications

Lawyers and judges have been working with the Uniform Commercial Code for about fifty years. Most states adopted the Uniform Commercial Code between 1960 and 1965.

Notwithstanding these years of experience and the importance of certainty to parties entering into commercial transactions, there is still considerable confusion over the use of extrinsic evidence, parol evidence and the parol evidence rule in answering the questions (1) what are the terms of a contract for the sale of goods and (2) what do those contract terms mean. No "black and white rules"-just various "shades of grey."

This essay explores the reasons for …