Regulating in the Shadow of the U.C.C.: How Courts Should Interpret State Consumer Protection Laws

By Barkhausen, Henry | The Yale Law Journal, April 2010 | Go to article overview

Regulating in the Shadow of the U.C.C.: How Courts Should Interpret State Consumer Protection Laws


Barkhausen, Henry, The Yale Law Journal


Uniform Commercial Code (U.C.C.) Article 9 governs the taking of security interests in personal property; all fifty states have consumer protection statutes, which also govern the taking of security interests in personal property. The requirements of these two statutes are often redundant or mutually exclusive. For secured creditors and borrowers, exactly which statute actually governs their transaction is often uncertain.

The U.C.C. theoretically has a solution to this problem. U.C.C. section 9-201 provides: "In case of conflict between this article and a rule of law, statute, or regulation described in subsection (b) [a state consumer protection law], the rule of law, statute, or regulation controls." If there is "conflict" between a consumer protection statute and U.C.C. Article 9, then the consumer protection statute should "control." Superficially, this is clear. In practice, it is not. When exactly is there a "conflict" between the U.C.C. and a consumer protection law? And what exactly does it mean for the consumer protection statute to "control"?

This level of confusion will soon increase. Revised Article 2 of the U.C.C. includes a new provision, section 2-108, that is the parallel of section 9-20l. (1) Section 2-108 substitutes the word "govern" but is otherwise identical, providing that a consumer protection law that "conflicts" with Article 2 will "govern" in its place.

The scope of this problem is large. Courts across the country have struggled with the meaning of section 9-201. (2) For lenders and borrowers, it is simply not clear which statute governs. And, as I will demonstrate, the U.C.C. and consumer protection statutes often impose radically different requirements. The confusion is harmful for both lenders and debtors. For lenders, it means added transaction costs and a concomitant decreased willingness to extend credit. For borrowers, it means weakened consumer protections. The expansion of this statutory arrangement to Article 2 will multiply the confusion. Article 9 applies only to secured transactions, while Article 2 applies to all purchases and sales, an even larger universe of transactions.

This Comment proposes a route out of this confusion. I present a method to define "conflict" and "control," (3) dividing responsibility between the U.C.C. and state consumer protection laws in a way that will preserve and enhance state powers to protect consumers while also protecting the integrity and purpose of the U.C.C.

I. AN EXAMPLE: REPOSSESSION RULES

A sample case will illustrate the problem. In Ford Motor Credit Co. v. Edwards, (4) the Maryland Court of Appeals (that state's highest court) adjudicated the boundary line between the U.C.C. and a state consumer protection law. U.C.C. Article 9 governs security interests in personal property. If a debtor holding secured property defaults, a secured creditor is usually entitled to repossess the property. (5) After fulfilling certain requirements, the creditor is allowed to sell the repossessed property, using the proceeds of sale to cover the debtor's debt. (6)

After repossessing the property, the secured creditor cannot immediately sell it. The U.C.C. requires that the secured creditor notify the debtor of the impending sale. (7) In the case of a public sale (for example, auction), former section 9-504 provided that "reasonable notification of the time and place of any public sale ... shall be sent by the secured party to the debtor." (8)

Frequently, state statutes impose notice requirements with different language. Maryland's Retail Installment Sales Act (RISA) (9) statute, for instance, provides that, before any repossessed collateral may be sold, the secured creditor (and repossesser) must deliver a notice to the debtor informing her (1) that she has the right to redeem the repossessed goods upon payment; (2) that she may be liable for a deficiency after the goods are sold; and (3) of the location where the goods are stored. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Regulating in the Shadow of the U.C.C.: How Courts Should Interpret State Consumer Protection Laws
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.