Codes are a tool that sovereign nations and states can use to encourage economic development. In the United States, state codes do not apply in Indian Country unless tribes adopt them. Tribes may do that, they may develop and adopt codes of their own, or they may work out agreements each time they enter into a business transaction.

Codes are a tool that sovereign nations and states can use to encourage economic development.

Until recently, since little business was done on reservations, there was little need for commercial codes. Some tribes have adopted some types of commercial codes, but most do not have a comprehensive set of codes. Business activity in Indian Country has been increasing, however, and with different rules applying to each of the more than 550 federally recognized tribes in the United States, both individuals and companies can find the cultural and legal barriers to doing business in Indian Country daunting.

The Montana-Wyoming Tribal Leaders Council and Gerald Sherman, an Oglala Lakota banker with First Interstate BancSystem of Montana and Wyoming, discussed this problem and decided to do something about it. With the support and involvement of the Federal Reserve Banks of Kansas City and Minneapolis, the University of Montana Indian Law Clinic, and many others, they initiated a process to develop a model tribal code. A conference was held in April, 1997 to discuss the code and tribal-bank relationships and sovereignty issues, with a diverse mixture of tribal leaders, lenders and resource people participating.

The code is designed to be used as a model by tribal governments in developing their own commercial codes, with modifications to fit their own tradition and culture. Once adopted, a code can provide shortcuts for doing business by establishing "boilerplate" ways to deal with situations that often arise in business transactions. The model includes definitions of terms, and outlines procedures for doing business within a jurisdiction. It establishes guidelines for extending credit, clarifying the extent of liability, and establishing jurisdiction. It specifies what to do if there is a dispute.

Codes are especially useful when people from different cultures . . .
do business with one another.

Codes are especially useful when people from different cultures--who are likely to make different assumptions about common issues--do business with one another. Rather than working out the specific details for every transaction, or figuring out what to do when what was expected doesn't happen, codes provide a previously agreed upon, legally enforceable way to proceed.

Separate business contracts can further specify additions or changes appropriate for a particular deal. With clear, enforceable commercial codes in place, tribal members and non-Indians alike can more easily do business on a reservation. Standard codes that have core similarities to the codes used by other tribes and by state governments can make it even simpler to do business on reservations.

Model Tribal Code: Secured Transactions was developed by the Indian Law Clinic at the University of Montana-Missoula School of Law, with participation by Montana and Wyoming tribes, lenders and others. It is available for tribal governments to use as they develop their own commercial codes. The Model Tribal Code is consistent with the new format for secured transactions that has been proposed by the National Conference of Commissioners on Uniform State Laws, and includes cross references to that format.

Copies of the model code are available from the Indian Law Clinic at the University of Montana-Missoula (see resource listing).