Chapter 55, Article 1 NMSA 1978 applies to a transaction to the extent that it is governed by another article of the Uniform Commercial Code.
History: Laws 2005, ch. 144, § 2.
ANNOTATIONSOFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
Prior uniform statutory provision. — Section 74, Uniform Sales Act; Section 57, Uniform Warehouse Receipts Act; Section 52, Uniform Bills of Lading Act; Section 19, Uniform Stock Transfer Act and Section 18, Uniform Trust Receipts Act.
Changes. — Rephrased and new material added.
1. Subsections (1) and (2) are intended to make it clear that:
This act is drawn to provide flexibility so that, since it is intended to be a semi-permanent piece of legislation, it will provide its own machinery for expansion of commercial practices. It is intended to make it possible for the law embodied in this act to be developed by the courts in the light of unforeseen and new circumstances and practices. However, the proper construction of the act requires that its interpretation and application be limited to its reason.
Courts have been careful to keep broad acts from being hampered in their effects by later acts of limited scope. Pacific Wool Growers v. Draper & Co., 158 Or. 1, 73 P.2d 1391 (1937), and compare Section 1-104. They have recognized the policies embodied in an act as applicable in reason to subject-matter which was not expressly included in the language of the act, Commercial Nat. Bank of New Orleans v. Canal-Louisiana Bank & Trust Co., 239 U.S. 520, 36 S. Ct. 194, 60 L. Ed. 417 (1916) (bona fide purchase policy of Uniform Warehouse Receipts Act extended to case not covered but of equivalent nature). They have done the same where reason and policy so required, even where the subject matter had been intentionally excluded from the act in general. Agar v. Orda, 264 N.Y. 248, 190 N.E. 479 (1934) (Uniform Sales Act change in seller's remedies applied to contract for sale of choses in action even though the general coverage of that act was intentionally limited to goods "other than things in action.") They have implemented a statutory policy with liberal and useful remedies not provided in the statutory text. They have disregarded a statutory limitation of remedy where the reason of the limitation did not apply. Fiterman v. J. N. Johnson & Co., 156 Minn. 201, 194 N.W. 399 (1923) (requirement of return of the goods as a condition to rescission for breach of warranty; also, partial rescission allowed). Nothing in this act stands in the way of the continuance of such action by the courts.
The act should be construed in accordance with its underlying purposes and policies. The text of each section should be read in the light of the purpose and policy of the rule or principle in question, as also of the act as a whole, and the application of the language should be construed narrowly or broadly, as the case may be, in conformity with the purposes and policies involved.
2. Subsection (3) states affirmatively at the outset that freedom of contract is a principle of the code: "the effect" of its provisions may be varied by "agreement." The meaning of the statute itself must be found in its text, including its definitions, and in appropriate extrinsic aids; it cannot be varied by agreement. But the code seeks to avoid the type of interference with evolutionary growth found in Manhattan Co. v. Morgan, 242 N.Y. 38, 150 N.E. 594 (1926). Thus private parties cannot make an instrument negotiable within the meaning of Article 3 except as provided in Section 3-104; nor can they change the meaning of such terms as "bona fide purchaser," "holder in due course," or "due negotiation," as used in this act. But an agreement can change the legal consequences which would otherwise flow from the provisions of the act. "Agreement" here includes the effect given to course of dealing, usage of trade and course of performance by Sections 1-201, 1-205 and 2-208; the effect of an agreement on the rights of third parties is left to specific provisions of this act and to supplementary principles applicable under the next section. The rights of third parties under Section 9-301 when a security interest is unperfected, for example, cannot be destroyed by a clause in the security agreement.
This principle of freedom of contract is subject to specific exceptions found elsewhere in the act and to the general exception stated here. The specific exceptions vary in explicitness: the statute of frauds found in Section 2-201, for example, does not explicitly preclude oral waiver of the requirement of a writing, but a fair reading denies enforcement to such a waiver as part of the "contract" made unenforceable; Section 9-501(3), on the other hand, is quite explicit. Under the exception for "the obligations of good faith, diligence, reasonableness and care prescribed by this act," provisions of the act prescribing such obligations are not to be disclaimed. However, the section also recognizes the prevailing practice of having agreements set forth standards by which due diligence is measured and explicitly provides that, in the absence of a showing that the standards manifestly are unreasonable, the agreement controls. In this connection, Section 1-205 incorporating into the agreement prior course of dealing and usages of trade is of particular importance.
3. Subsection (4) is intended to make it clear that, as a matter of drafting, words such as "unless otherwise agreed" have been used to avoid controversy as to whether the subject matter of a particular section does or does not fall within the exceptions to Subsection (3), but absence of such words contains no negative implication since under Subsection (3) the general and residual rule is that the effect of all provisions of the act may be varied by agreement.
4. Subsection (5) is modelled on 1 U.S.C. Section 1 and New York General Construction Law Sections 22 and 35.
Repeals and reenactments. — Laws 2005, ch. 144, § 2, effective January 1, 2006, repealed former 55-1-102 NMSA 1978, as enacted by Laws 1961, ch. 96, § 1-102, relating to rules of construction and variation by agreement, and enacted a new 55-1-102 NMSA 1978. Former 55-1-102 NMSA 1978 is now part of Subsection A of 55-1-103 NMSA 1978. For provisions of former 55-1-102 NMSA 1978, see the 2004 NMSA 1978 on NMOneSource.com.
Compiler's notes. — Laws 1961, ch. 96, § 10-105, directed the compiler to retain article, part, section and subsection designations, headings, numbers, indentations and layout as used in Articles 1 to 9 of this act.
For current law governing variation by agreement, see 55-1-302 NMSA 1978
Law reviews. — For article, "Fixtures and the Uniform Commercial Code in New Mexico," see 4 Nat. Resources J. 109 (1964).
For comment, "Commercial Law - Uniform Commercial Code - Sale of Goods," see 8 Nat. Resources J. 176 (1968).
Clovis Nat'l Bank v. Thomas, 77 N.M. 554, 425 P.2d 726 (1967), commented on in 8 Nat. Resources J. 183 (1968).
For article, "Essential Attributes of Commercial Paper - Part I," see 1 N.M. L. Rev. 479 (1971).
Am. Jur. 2d, A.L.R. and C.J.S. references. — 11 Am. Jur. 2d Bills and Notes § 51; 68A Am. Jur. 2d Secured Transactions § 358 et seq.
Sufficiency of description of collateral in financing statement under U.C.C. §§ 9-110 and 9-402, 100 A.L.R.3d 10.
Sufficiency of secured party's signature on financing statement or security agreement under U.C.C. § 9-402, 100 A.L.R.3d 390.
Sufficiency of description of collateral in security agreement under U.C.C. §§ 9-110 and 9-203, 100 A.L.R.3d 940.
31 C.J.S. Estoppel §§ 55, 57, 98; 82 C.J.S. Statutes § 315.