Council Approves Article 2 Amendments

At its meeting in New York City on October 17 and 18, the Council gave its approval to the amendments of Articles 2 (Sales) and 2A (Leases) of the Uniform Commercial Code previously approved by the National Conference of Commissioners on Uniform State Laws at its Annual Meeting last summer. Also approved without significant change were modest and considerably less controversial amendments to Article 7 (Documents of Title), which in contrast to the more-than-a-decade-long effort to reform Article 2, was presented to the Council for only the first time this fall. The meeting also included review of materials on Torts, International Jurisdiction and Judgments, and Criminal Sentencing.

In 2001 the ALI membership, which in a departure from normal Institute procedure considered the amendments to Articles 2 and 2A in advance of the Council, tentatively approved them, subject to the Council’s subsequent review and with the understanding that any fundamental changes made by either the Council or NCCUSL would have to be submitted to the membership. The version of the amendments approved this year contained three such changes, the most significant of which involved a revision of the definition of "goods" to exclude "information" and new language in the commentary on scope indicating that whether and to what extent a transaction that includes both goods and information falls within the scope of Article 2 as a "transaction in goods" is to be determined from all the facts and circumstances of a particular case. The new language on scope can be found in its entirety on the Institute’s website (www.ali.org); it was the subject of online comment and criticism by interested members earlier in the fall, and the "posts" from that electronic forum are also accessible via the website. The significant changes made by NCCUSL and accepted by the Council involved the Article 2 provisions on the statute of frauds and liquidated damages, the latter reversing a position adopted by a narrow margin by the Institute last year. The Council also recommended additional changes, particularly with respect to the commentary on specific performance. The draft to be submitted to the 2003 Annual Meeting is expected to consist of all of the amendments to Articles 2 and 2A together with most, if not all, of the proposed Official Comments, but the agenda will concentrate on the changes made since the last review by the membership, including the new Comments and their suitability to the previously approved text.

The main focus of the Council’s review of Restatement Third, Torts: Liability for Physical Harm (Basic Principles), was the chapter on causation that it had insufficient time to consider last year and that the Institute was unable to reach for even preliminary discussion in May; also considered were the Reporters’ latest revisions of the sections on duty that had proven controversial in two earlier submissions to the membership, as well as a revision of the extended Comment on toxic substances and disease that also was the source of much controversy at this year’s Annual Meeting. With respect to that Comment, Director Lance Liebman announced that the National Academy of Sciences had agreed to convene a group of experts to review its scientific accuracy. The material discussed by the Council was approved for submission to the Annual Meeting, subject to revisions agreed upon at the meeting and review before publication of those revisions by a special ad hoc committee to be appointed by the Director.

A new draft consisting of partial revisions to the proposed Foreign Judgments Recognition and Enforcement Act based upon discussion both at the 2002 Annual Meeting and a subsequent meeting of the Advisers and Members Consultative Group was also presented. It contained two new alternative provisions that, consistent with a nonbinding sense-of-the-house vote by the membership in May, would both require reciprocity as a condition for enforcing the judgments of a foreign state. In a series of votes in October the Council favored a reciprocity provision that would require the State Department to maintain a list reflecting whether or not other states accord recognition to comparable judgments rendered in the United States, but one that would also allow the presumption raised by such a list to be rebutted. The Council was unable to complete its review of the Judgments project in October, and the Reporters will be submitting additional material, including a reworked reciprocity provision responsive to the views of the Council, at the Council’s next meeting in December. At that time the nature of the project’s submission for the 2003 Annual Meeting will be decided.

There was also an extensive preliminary discussion in October of the Institute’s new project to reexamine and reformulate the sentencing provisions of the Model Penal Code in light of the drastically different attitudes and approaches toward sentencing that have developed since the original formulation of the Code four decades ago. The responses to the project’s Plan for Revision and its first Preliminary Draft were vigorous and suggested that they will be comparably stimulating when the project is ready for consideration by the membership. No votes, however, were taken on the project in October, and it is not expected to be considered on the floor of the Institute until 2004.

Along with the additional material on the International Jurisdiction and Judgments Project that has been scheduled, new drafts on Agency and Restitution will be submitted to the Council for its meeting on December 12 and 13 in Philadelphia, and there will also be preliminary discussion of another major new project, Principles of the Law of Nonprofit Organizations. The agenda for the 2003 Annual Meeting in Chicago will be determined following the December meeting.