ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Thursday, March 10, 2005

Revised UCC Article 1 Update

Since my February 1 posting, versions of Revised Article 1 have been introduced and are currently pending before the legislatures of Arkansas (HB 1497), Illinois (SB 1647), Kansas (HB 2453), Montana (SB 401), New Hampshire (HB 719), and New Mexico (HB 834). NCCUSL also reports that Revised Article 1 has been introduced in Oklahoma, as HB 2028.  However, HB 2028 proposes only technical changes to Oklahoma’s version of pre-Revised 1-102.  A search of other pending House measures reveals no comprehensive bill to revise Oklahoma's version of Article 1.  Also, North Dakota SB 2143, introduced earlier this year, appears to have died on the vine, having been unanimously voted "do not pass" out of committee and defeated in the Senate 45-1.

I previously reported that the text of Connecticut HB 5975 was unavailable on-line.  With thanks to Quinnipiac's Sandy Meiklejohn, I revisited he legislative website and saw that what I thought was a bill status summary was, in fact, the bill -- the entire text of which reads "Be it enacted by the Senate and House of Representatives in General Assembly convened: That title 42a of the general statutes be amended to adopt the revision of Article 1 of the Uniform Commercial Code concerning general provisions."  I construe this to mean the uniform version of Revised Article 1, including uniform R1-201(b)(20), which eliminates the bifurcated good faith standard in pre-Revised 1-201(19) and pre-amended 2-103(1)(b) & 2A-103(3) and holds merchants and non-merchants alike to "honesty in fact and the observance of reasonable commercial standards of fair dealing" and uniform R1-301, which allows the parties to a non-consumer transaction to choose to have their contract governed by the law of a jurisdiction bearing no relation to either the parties or the transaction.

To date, only three of the seven states (Delaware, Minnesota, and Texas) that have adopted Revised Article 1 have adopted uniform R1-201(b)(20).  The other four (Alabama, Hawaii, Idaho, and Virginia) have retained the bifurcated good faith standard by retaining the pre-R1 "honesty in fact in the conduct or transaction concerned" definition in pre-Revised 1-201(19) and leaving 2-103(1)(b) & 2A-103(3) unchanged.  However, of the nine states with bills currently pending (assuming that I am correctly interpreting the import of Connecticut's bare language), only Nebraska LB 570 retains pre-Revised Article 1’s “honesty in fact in the conduct or transaction concerned.” The other eight -- Arizona SB 1234, Arkansas HB 1497, Connecticut HB 5975, Illinois SB 1647, Kansas HB 2453, Montana SB 401, New Hampshire HB 719, and New Mexico HB 834 -- choose the unitary good faith standard over the current bifurcated one (as did ill-fated North Dakota SB 2143).

Arkansas HB 1497, Montana SB 401, and New Mexico HB 834 join Nebraska LB 570 and the versions of Revised Article enacted in the seven enacting states in rejecting uniform R1-301 in favor of a choice-of-law provision that generally resembles pre-Revised 1-105. (Ill-fated North Dakota SB 2143 also rejected uniform R1-301.) Illinois SB1647, Kansas HB 2453, and New Hampshire HB 719, like Arizona SB 1234 and (again assuming that I am correctly interpreting the import of Connecticut's bare language) Connecticut HB 5975, include uniform R1-301.

Arizona SB 1234 is pending before the Arizona Senate Commerce and Economic Development Committee.

The Arkansas House has approved Arkansas HB 1497 (with one technical amendment) by a vote of 92-0 and transmitted the bill to the Senate for its consideration.

Connecticut HB 5975 is pending before the Connecticut Joint Committee on Judiciary

Illinois SB 1647 is pending before the Illinois Senate Judiciary Committee.

Kansas HB 2453 is pending before the Kansas House Judiciary Committee.

The Montana Senate has approved Montana SB 401 (as amended to correct the peculiar language in the scope provision that I mentioned previously) by a vote of 49-1 and transmitted the bill to the House for its consideration.

Nebraska LB 570, as amended, appears to have been voted favorably out of the Nebraska Legislature's Banking, Commerce, and Insurance Committee, but to not yet have been voted on by the Legislature.

New Hampshire HB 719 is pending before the New Hampshire House Commerce Committee.

New Mexico HB 834 has been unanimously voted "do pass" by the New Mexico House Business and Industry Committee and is now before the House Judiciary Committee.

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