Filing the appropriate UCC forms for consignment merchandise is a necessity in today’s business climate, two legal experts told a capacity crowd at a recent Diamond Manufacturers and Importers Association meeting.
Brooklyn Law School professor Neil Cohen, and Edwin Smith, a partner in law firm Bingham McCutchen, both authorities on the Uniform Commercial Code, noted that many of the forms the industry currently uses do not offer the proper protection.
“Your interest [in your goods] isn’t protected unless you file the forms with the correct public office,” Cohen said.
He noted that, when filing UCC forms, accuracy is paramount – since, in recent disputes, the spelling of the company’s names and location where the UCCs were filed have been contested.
“Get it right, and if there is a mistake, have it be the tiniest mistake,” Cohen said.
He noted the filing fee for UCCs was “pretty low,” and there are service companies that can help companies fill out the forms.
In his introduction, DMIA executive director Ben Kinzler noted that the UCC tools “are not perfect, but they far better doing nothing.”
“In order for these tools to be effective, however, every member of this industry must begin to use them and demand them as a condition of doing business and supplying credit to their customers,” he said. “The enormity of the losses which this industry sustained in recent bankruptcies such as Friedmans, Fortunoffs and Whitehall, makes it abundantly clear that the diamond industry needs to reexamine the traditional ways in which it conducts business.”
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