Teaching Assistants: Amy Boss on Article 2A
As some of our readers know, I teach at Valparaiso University Law School, which closes this month. Because the University decided to stop admitting new law students in 2017, I have not taught contracts since then. Next year, I will return to the contracts classroom, and also teach sales and leases at the Oklahoma City University School of Law. I am used to teaching a 2-credit sales course, but at OCU Law, the course is three credits, and that made me think I ought to put more thought into leases and Article 2A of the Uniform Commercial Code (UCC).
Amy begins by summarizing how the need for Article 2A arose. Equipment leasing wasn’t really a thing in the 1950s, when the UCC was first adopted. By the late 80s, equipment leasing accounted for 20 percent of all of U.S. capital investment (577). But the law did not keep pace. Chattel leases fell somewhere between bailments law and contracts law and, as a result, the law on chattels was not merely non-uniform; it was unpredictable (578-79). Worse still, people began to question the validity of the sale/lease and secured transaction/lease distinctions, and courts began applying the UCC’s Article 2 to lease transactions (580-81). Leases might have been shoehorned into parts of Article 2 or Article 9, but they had enough unique features to merit their own, separate treatment (582). UNIDROIT published its Preliminary Draft Uniform Rules on International Finance Leasing in 1984 (583).
A number of organizations came together to draft Article 2A, which began its life as the Uniform Personal Property Leasing Act. The first draft, which emerged late in 1982, was largely modeled on UCC Article 2, with remedial provisions informed by Article 9 (591-92). After years of further work, a version was presented to and approved by the American Law Institute in 1986 (593-94). After input from the states, the final version, with official comments were published in 1987 (596).
In the end, the drafters chose to model much of Article 2A on Article 2, and they often took the Article 2 provisions, warts and all. As Amy puts it, “Many provisions of Article 2 have been carried over, literally and slavishly, into Article 2A, complete with all the drafting flaws in the original which have surfaced” (600). When the drafters made changes in the language adopted from Article 2, it was unclear whether the changes were intended to be stylistic or substantive (601-02). In addition, while Article 2A includes some Article 2 provisions that are important for sales but rarely arise in leases, Article 2A omits some Article 2 provisions that would be relevant to leases, leaving those areas to be governed by bailment law. (602-03).
The remainder of the article addresses the relationships among the various law reform groups that contributed to the drafting of Article 2A. Amy raises the difficult issue of lack of uniformity that has arisen among the various Articles of the UCC, which has undergone piecemeal revision. She discusses the pros and cons of a complete revision of the UCC. But there has been a lot of water under the bridge on that topic since 1988.
The Article is useful in situating Article 2A in its historical and doctrinal context. I am glad that Any posted it when she did, as I will want to keep the Article in mind as I teach sales and leases in the Fall. I particularly want to be mindful of the borrowings and gaps in 2A’s coverage and of its relation to bailment law.