The Impact of Revised Article 5 on Small and Mid-Sized Exporters
UCC Law Journal, Vol. 29, p. 393, 1997
29 Pages Posted: 15 Sep 2008
Abstract
Revised Article 5 of the Uniform Commercial Code is the product of years of effort to modernize the statute and harmonize it with international letter of credit rules. Since Article 5 has been sent to the states for review and enactment, the impact of certain provisions on small and mid-sized companies should be considered. These smaller companies as a group contribute substantially to the growth of the U.S. economy through exports. Individually, however, they have little leverage to use with a bank in a dispute over a letter of credit.
There are two provisions that impact negatively on these companies. The first provision, Section 5-108(e), potentially impacts adversely on all parties, since it abridges the constitutional right to a jury trial. The second, Section 5-111(e), which mandates that attorney's fees and expenses of litigation be awarded to the prevailing party, may effectively prevent smaller companies from bringing a lawsuit against a bank, because of the risk of having to pay the bank's attorney's fees if they lose. Both of these provisions need modification.
Keywords: uniform commercial code, revised article 5
JEL Classification: K40
Suggested Citation: Suggested Citation