UCCs Effect On International Commerce Essay Example | Topics and Well Written Essays - 750 words

UCCs Effect On International Commerce - Essay Example The third article provides for the transactions in commercial papers such as negotiable instruments and promissory notes (Hinkelman & Shippey, 2004). The other provisions are also important in trade since they provide guidelines on issues such as bulk transfers, secured transactions and dealings in investment securities such as stocks and bonds. The UCC applies to national trade, but would have positive effects if applied to international commerce. The UCC is designed for quick references on laws regarding formation of business contracts, expert analysis of the impact of various commercial transactions and easy handling of court decisions regarding disputes emanating from trade (Hinkelman & Shippey, 2004). The first effect of UCC on international commerce is facilitation of international transactions in the sale of goods. UCC will ensure that cross-border merchants have faith in sale of goods contracts due to the uniformity in the regulatory laws. The increase in foreign direct inves tments and growth in technology has led to emergency of new type of business transactions that require a uniform form of contractual agreements and legal protection (Hinkelman & Shippey, 2004). For instance, technology has allowed companies to sell digital products across national borders and multinational companies to list their stocks in different national stock exchange markets. In this case, uniform commercial code would be helpful in fostering international commerce (Hinkelman & Shippey, 2004). Uniform commercial code in the international commerce would be useful in curbing instances of international economic crimes such as money laundering and dumping. The UCC would be capable of offering legal guidelines that address issues relating to diversion of cargo in the high seas, counterfeiting and fraudulent insurance claims that are common in maritime trade. UCC will be useful in global tendering processes (Hinkelman & Shippey, 2004). The provisions will be important in ensuring un iformity of global tenders such as government tenders. This will ensure that contracting parties receive high quality services due to good faith requirements and transparency of the process (Hinkelman & Shippey, 2004). UCC will ease the international transfer of funds through creating uniform requirements in bank collections, settlements of financial securities and fund transfers among the international trade participants. UCC will create legal performance obligation to transactions involving a secured party. The code of business will guide the transfers of dematerialized securities. In this case, the final investors in the investment securities will have adequate security entitlement and right to receive any dividends accruing from their ownership of the security. Article 8 decomposes the security rights thus creditors are protected from the possibility of the investor of transferring such stake without informing the creditor who has some interest in the concerned security (Hinkelm an & Shippey, 2004). The impact of securing the transactions is to provide a relief to the lender through a security interest in the collateral and an assurance in the default by the borrowing party. In most states, the secured transactions use personal property, fixtures and intangible property as the collateral in the case of default. This code will facilitate bankruptcy settlements thus facilitating international trade transactions (Hinkelman & Shippey, 2004). Articles 5 of the UCC provide guidelines on the issuance of letters of credit by financial institutions. The letters of credit