Most Illinois UCC problems come from paperwork that was never signed, filed under the wrong name or left to expire. This checklist follows a sale, a loan and a bank account. See the rules and numbers and the overview; consumer sales may also fall under the Consumer Fraud Act.
The Salt Creek Paper Trail Test
- Find the signed record for each goods sale of $500 or more. Between merchants, note whether a confirming record went out or came in and whether anyone objected in writing within 10 days.
- Check warranty disclaimers. One covering merchantability generally must mention that word and, in a writing, be conspicuous, unless wording such as "as is" applies.
- On each UCC-1, match the debtor name to the public organic record or, for an individual with an unexpired Illinois license, the license, not a trade name.
- Keep the signed authorization behind every filing.
- Calendar the 5-year lapse date and the 6-month continuation window.
- After a payoff, confirm the filing was ended. If not, a signed demand starts the 20-day clock.
- If delivered goods are defective, tell the seller in writing soon after finding the problem.
- Reconcile bank statements monthly, a routine covered by bookkeeping, and report unauthorized items right away.
Common mistakes
- Naming a trade name or the wrong legal name as the debtor on a UCC-1.
- Filing a continuation outside the 6-month window, or letting the 5 years lapse.
- Filing without signed authorization, or not ending a paid-off filing within 20 days of a signed demand. Each instance can cost $500.
- Using a disclaimer that never mentions merchantability and has no "as is" wording, or relying on an oral deal for goods of $500 or more.
- Accepting defective goods and never telling the seller.
- Repossessing in a way that breaches the peace, or selling collateral without the required notice.
When to talk to an attorney
- Drafting a security agreement, buying or selling a business with secured debt, or ranking competing liens.
- A borrower defaults, collateral must be repossessed or sold, or a debtor files bankruptcy.
- A warranty dispute over significant goods, or a forged check or fraudulent wire the bank disputes.
- Digital assets, electronic records or lease-finance structures.
A CPA cannot answer those legal questions. A CPA can help with the bookkeeping, tax and accounting side, such as financing and bank loans, and works alongside the owner's attorney.
Frequently asked questions
Do I need a signed contract for a sale over $500 in Illinois?
For goods, Section 2-201 says a contract priced at $500 or more is enforceable only if a record signed by the party being held to it shows a sale was made, with listed exceptions. Between merchants, a confirming record not objected to within 10 days can satisfy the rule.
How long does a UCC-1 last in Illinois?
A filed financing statement is effective for 5 years, or 30 years for an initial filing marked as a public-finance or manufactured-home transaction. A continuation can be filed only in the 6 months before the lapse.
How long do I have to sue over a goods contract or report a forged check?
A suit on a sale of goods must start within 4 years after the breach. A customer who does not report a forged signature or alteration within 1 year after the statement is available is barred from raising it against the bank.
Does the UCC cover service contracts?
Not by itself. Article 2 covers goods. In a mixed deal it applies to the goods side, and to the whole deal if goods predominate, though other law can still govern the non-goods parts.
Official sources
- Illinois General Assembly: Uniform Commercial Code (810 ILCS 5)
- Illinois Secretary of State: Uniform Commercial Code
- Illinois Secretary of State: online UCC filing and search
This page is a plain-language summary. The official source controls if there is any difference.