May 14, 2020

Uniform Commercial Code Articles 3, 4, and 4A

Uniform Commercial Code Articles 3, 4, and 4A

Policies and Issues in the Proposed Revision of Articles 3 and 4 of the UCC
      Edward L. Rubin, 43(2): 621–64 (Feb. 1988)
The U.C.C.'s sponsoring organizations are currently revising Articles 3 and 4 of the Code. This Article explores the policy underlying the revision effort and discusses the issues raised by the revision of particular sections.

Introduction to the Special Issue on the Uniform Commercial Code
      Fred H. Miller and William B. Davenport, 45(S): 1389–97 (June 1990)

The Need for Article 4A
      Robert G. Ballen and Natalie H. Diana, 45(S): 1399–1400 (June 1990)
This Article discusses the need for a comprehensive body of law governing wholesale wire transfers. The unique characteristics of such transfers, as well as the general policies of Article 4A reflecting such characteristics, are also discussed.

Basic Concepts in Article 4A: Scope and Definitions
      Patricia Brumfield Fry, 45(S): 1401–24 (June 1990)
In 1989, Article 4A—Funds Transfers—was approved for submission to the states for enactment. This new Article of the U.C.C. is designed to govern transfers of credit from an originator to a beneficiary through the banking system. The scope of Article 4A is discussed and transactions governed by it are described. In addition, a number of fundamental concepts are discussed, including payment orders and funds transfers, the acceptance and execution of orders, the effect of agreements and regulations, and the rules for choice of law.

Unauthorized and Erroneous Payment Orders
      J. Kevin French, 45(S): 1425–45 (June 1990)
The question of how best to allocate losses arising in funds transfers due to fraud or error is important to banking institutions as well as funds transfer customers. This Article examines the treatment of such losses by Article 4A. Particular attention is devoted to the implications which Article 4A has for the manner in which funds transfers will be conducted and in which disputed losses will be resolved in the future.

Proper and Improper Execution of Payment Orders
      Thomas C. Baxter, Jr. and Raj Bhala, 45(S): 1447–66 (June 1990)
Fundamental concepts concerning payment order execution are set forth. What constitutes proper execution and the rights and liabilities of parties in the event of improper execution are explained. The authors note that payment order execution is so important because it is the "pump" that causes funds to be transferred.

Duties of the Beneficiary's Bank
      Robert G. Ballen and Natalie H. Diana, 45(S): 1467–71 (June 1990)
This Article explains the duties under Article 4A of the beneficiary's bank, including the circumstances under which the beneficiary's bank may incur liability with respect to a payment order it receives. The key concepts of "acceptance" and "rejection" of a payment order are defined.

Settlement Obligations and Bank Insolvency
      Norman R. Nelson, 45(S): 1473–84 (June 1990)
After outlining the provisions of proposed Article 4A that govern the creation and discharge of obligations to pay, this Article reviews how these provisions apply in a bank insolvency. It also describes procedures that have been designed at CHIPS, a major funds transfer network, to limit and control exposures to the credit risk of other parties and concludes with a discussion of proposed federal netting legislation designed to assure efficient settlement of payment obligations and to avoid risks of disruption to the financial system in the event of a major bank failure.

The Interrelationship of Article 4A With Other Law
      Thomas C. Baxter, Jr. and Raj Bhala, 45(S): 1485–1507 (June 1990)
The points of contact between Article 4A and eleven other bodies of law are examined. Those parts of Article 4A that are intended to be supplemented, enhanced, or preempted by another body of law are highlighted. The authors emphasize that interaction between Article 4A and the other bodies is contemplated by the draftspersons and carefully controlled.

Beyond Enactment of Article 4A: The Next Steps
      Robert G. Ballen and Natalie H. Diana, 45(S): 1509–1511 (June 1990)
This Article discusses rules that funds transfer systems may wish to adopt in light of Article 4A. Provisions that depository institutions and other corporate and commercial users of payments subject to Article 4A may wish to consider including in their agreements, as well as operational procedures such entities may wish to implement as a result of Article 4A, are also discussed.

Federal Versus State Adoption of Article 4A
      David B. Goldstein, 45(S): 1513–20 (June 1990)
Proposing Article 4A as a new Article to the U.C.C. assumes that Article 4A should be adopted as a state rather than a federal statute. This Article argues for federal adoption. The author recognizes, however, that federal adoption is not likely in the near future and therefore urges support for the state adoption of Article 4A.

A Law of Financial Accounts: Modern Payment and Securities Transfer Law
      Joseph H. Sommer, 53(4): 1181–1215 (Aug. 1998)
This Article discusses the structure and policies of modern payment and securities transfer law, as epitomized by U.C.C. Articles 4A and part 5 of U.C.C. Article 8. Both bodies of law require tremendous legal clarity and govern highly intermediated systems of accounts. These similar requirements evoke similar responses: formalism and careful compartmentalization of legal responsibility. The same analytical structure explains most of the distinctive features of these bodies of law: security interests in deposit accounts and security entitlements, enforcement of judgements against accounts, third-party claims, and conflict-of-laws.

Deterring Check Fraud: The Model Positive Pay Services Agreement and Commentary
      Subcommittee on Payments, 54(2): 637–84 (Feb. 1999)
The recent increase in check fraud in the United States has been attributed, in part, to the proliferation of affordable computer equipment and software used to produce fraudulent checks, the availability of laser printers, scanners, and photocopiers used to duplicate and print fraudulent checks, and the ease with which account information can be obtained from customers. In addition, increased competition among financial institutions may be encouraging banks to give customers access to their funds earlier than is legally required. The purpose of positive pay arrangements is to detect and prevent check fraud. The arrangements, however, cannot typically detect all types of check fraud. Before entering into a positive pay agreement, therefore, it is important to understand the various types of check fraud schemes that exist, the way in which the U.C.C. apportions liability for losses resulting from check fraud, and the degree to which positive pay will detect these frauds and alter the U.C.C. liability scheme. The Subcommittee's decision to prepare the Model Positive Pay Services Agreement and Commentary was based upon a perception that banks and their customers, and their respective lawyers, would welcome assistance in preparing agreements for positive pay services. The Model Agreement and Commentary raise issues that should be addressed by counsel and suggest responses to those issues.

Initial Report of the Joint Task Force on Deposit Accounts Control Agreements
      Joint Task Force on Deposit Account Control Agreements, ABA Section of Business Law, 61(2):745—796 (February 2006)

Securities on Blockchain and the Uniform Commercial Code
     Reade Ryan and Mayme Donohue; 73(1): 85-108 (Winter 2017/2018)
This article initially provides a high-level description of blockchain technology intended to be accessible to those without a technical background, and illustratively describes an existing blockchain system that already evidences securities issued and being traded. The article then sets forth and analyzes how Article 8 of the Uniform Commercial Code covers blockchain securities as “uncertificated securities.” Finally, the article provides guidance to corporate lawyers faced with giving a legal opinion relating to the issuance and sale of securities on a blockchain.