December 03, 2011
Secured Transactions and the Richness of Commercial Law
Posted by Account Deleted
An interesting post on Concurring Opinions has me reflecting (even more so than usual) on the substance and scope of the Secured Transactions course in law school. While the post focused more on coverage in the course, I've been thinking quite a bit about specific skill development opportunities. To be sure, I definitely view Secured Transactions as a foundational course for any student interested in practicing commercial and corporate law. But beyond that, I see a number of other benefits to studying Article 9. There's the obvious benefit of additional exposure to statutory law. But there are also many less obvious skill development opportunities, which are particularly rich in the Article 9 realm.
Careful study of Secured Transactions helps students become attuned to the difficulty of harmonizing a uniform body of state law governing commercial transactions in a federal system. I try to emphasize the conflicts of laws and federal preemption angles early in the semester, so that students can appreciate these nuances even when the text of Article 9 provides a short-cut. By "short-cut," I mean that many provisions of Article 9 expressly codify an outcome that would otherwise need to be reached by a conflicts analysis. 

A great example can be found in 9-302, where Article 9 graciously defers to federal law by not requiring (or giving legal force to) a UCC-1 Financing Statement with respect to property that is subject to a federal statute which specifies a different place of filing. It helps to ask students to imagine what the outcome would be if this provision did not exist. Some may argue that in the absence of Article 9's express deference to the federal filing requirement, there would not necessarily be a direct conflict. In other words, parties could readily file under both systems. Others may raise a field preemption argument, whereby any Article 9 filing requirement would be rendered moot by a federal statutory scheme on point. Many others will invoke typical Article 9 policy considerations (such as certainty, predictability and uniformity in commercial law) and argue that a duplicative filing requirement would introduce uncertainty to filers and searchers. Indeed, each of these arguments has been raised in cases dealing with conflicts between Article 9 and federal law.

Once identified, the conflicts angle can be revisited in a number of contexts. Article 9 codifies many resolutions of conflicts, including state law conflicts (consider Article 9’s deference to state motor vehicle title statutes). It can be useful to brainstorm these issues throughout the semester, because once students are sensitive to the conflicts issue, they can more readily understand more complex provisions of Article 9. For instance, consider the ever-misunderstood 9-408. This is a statute that, upon a student’s first reading, seems to boldly set aside federal and state laws, as well as the private contractual agreements of persons who may not even be party to a transaction governed by Article 9. Wow! But once the statute is contextualized within the conflicts and federal preemption issue, students can appreciate that the drafters were not actually trying to overturn or nullify conflicting federal or state laws and contractual agreements. Rather, the provision reflects a much more modest goal: it seeks to clarify the operative effect that those conflicting provisions will have under Article 9, purely for Article 9 purposes. It’s a subtle distinction, but an important one. 

I believe that grappling with puzzles of this sort can really pay out in practice. Young attorneys are often called upon to interpret and apply statutes quickly. A rich awareness of statutory interpretation can guide the analysis. So, too, can a basic understanding of how a particular law relates to other laws in a multistate, federal system. And, on a more personal note, I think these inquiries introduce students to the richness and rigor of commercial law.

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