By: Caroline Edwards
Controversy has surrounded many of the principles and doctrines
of the Uniform Commercial Code (the “Code”) for more than four
decades. One criticism, which emerged in the 1960s, was that
the Code was indifferent to economic hardships suffered by
consumers in the marketplace. This indifference triggered
demands for consumer protection laws and, in the 1970s, Congress
and state legislatures enacted reform measures designed to curb
abuses in transactions that fall within the scope of the Code.
Although protection laws multiplied in number, some scholars
claimed that fundamental fairness in contract relationships between
consumers and merchants had not been achieved. Existing
consumer laws were limited in coverage, and injustices not captured
by these laws continued to flourish in the marketplace.
During the 1980s, commentators warned that the economic welfare of
consumers would continue to deteriorate unless more innovative
solutions to consumer grievances were developed and implemented in
every state. At the same time, the American Law Institute
(ALI) and the National Conference of Commissioners on Uniform State
Laws (NCCUSL) recommended that existing articles of the Code be
revised and new articles be created. This recommendation was
prompted by two concerns. First, some Code sections were
ambiguous and conflicting judicial interpretations had
emerged. These interpretations undermined the Code’s
objective to provide uniform principles and standards to govern
commercial transactions in this country. Second, state
legislatures enacted the Code before the consumer movement was
organized and before technology and new methods of doing business
dominated the marketplace. The Code was in danger of becoming
hopelessly outdated unless principles were established to
accommodate these developments.
Consumer advocates greeted the recommendation with
enthusiasm. The Code had not been completely updated since it
was enacted into law by state legislatures in the early
1960s. Consumers believed that the uniform law process
offered an ideal opportunity to persuade members of the sponsoring
organizations that more comprehensive special consumer provisions
were necessary and desirable additions to Code articles.
Article 2 (Sales), described as “[t]he heart of the Code,” became
the rallying point for consumer groups. They claimed that the
Article’s provisions, which rest on the doctrine of freedom of
contract, enabled skilled and powerful sellers to perpetrate
injustices upon unsuspecting consumers burdened with goods which
failed to meet their reasonable expectations. They also
charged that the Article’s reliance upon the private lawsuit to
provide relief to aggrieved buyers was unfair to many consumers who
had neither the time nor the financial resources to initiate
litigation. During the 1990s, proposals were developed to
address a variety of important issues, including standard form
contracts, disclaimers of implied warranties, and efficient and
affordable enforcement procedures.
After more than a decade of work by two successive drafting
committees, amendments to Article 2 have been approved by the
sponsoring organizations and will be presented to state
legislatures for adoption. It is evident, however, that
consumers have achieved only modest victories and that Article 2
will continue to be one of the most important bodies of law to
vigorously apply the principle of government restraint for the
purpose of preserving freedom of contract. Some commentators
have suggested that the incorporation of only a small number of
special consumer provisions was necessary to ensure approval of the
amendments by the ALI and the NCCUSL and uniform enactment by the
states. Other writers have concluded that the uniform law
process did not diffuse the tension between consumers and
commercial interests and that this tension created an
insurmountable obstacle to substantive changes in Article 2’s
provisions.
The lessons to be learned, though, are not limited to why
uniform enactment is essential to the viability of a commercial
code or to an examination of how the uniform law process molded the
final products. By the early 1980s, debate over the wisdom of
consumer measures had emerged. Skeptics charged that
regulatory laws, which restrict freedom of contract, are neither
necessary to protect the interests of most consumers nor desirable
because they impose adverse consequences upon those they are
intended to benefit as well as upon the community as a whole.
The controversy prompted Fred Miller, who served as Executive
Director of the NCCUSL during the uniform law process, to demand
that documentation be supplied to establish both the need for and
desirability of consumer proposals. The impact of the demand
was immediate. Consumer advocates could not provide data to
establish the wisdom of every proposal and, as a result, only a
relatively few measures were deemed worthy of consideration by the
leadership of the Conference. The purpose of this article is
to explore the reasons why consumer protection laws are
controversial and to suggest how this controversy frustrated
efforts to address a number of important consumer issues in Article
2.
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