What is UCC Article 2?
How do you legally define it?
What are the essential elements you should know!
In this article, we will break down the legal definition of UCC Article 2 so you know all there is to know about it!
Keep reading as we have gathered exactly the information that you need!
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Table of Contents
Uniform Commercial Code
The Uniform Commercial Code (or UCC) is a statute governing essentially all commercial transactions in the United States applicable “uniformly” within all the American states.
What’s unique with the UCC is that since it applies uniformly across all states, businesses can transact with one another and have the assurance that all American courts and all jurisdictions will apply the same “uniform” law to their transaction.
The uniformity provides businesses with legal certainty allowing them to transact on an interstate basis with confidence.
When the Uniform Commercial Code was drafted, Pennsylvania became the first state to adopt it within its state in 1953.
Over the course of the next twenty years, all the other states adopted the substantive elements of UCC.
Although UCC is meant to be uniform, not all states have adopted it in a mirrored fashion.
As a result, you may have some states where the legislative text may slightly vary from the drafting of the original UCC text.
Article 2 of the Uniform Commercial Code is one of the nine substantive articles composing the UCC.
Each article of the UCC governs a separate area of the law where the second article particularly governs the sale of goods.
To help you situate where Article 2 UCC sits within the Code, here is an outline of UCC:
- UCC Article 1: General Provisions
- UCC Article 2: Sales
- UCC Article 2A: Leases
- UCC Article 3: Negotiable Instruments
- UCC Article 4: Bank Deposits and Collections
- UCC Article 4A: Funds Transfer
- UCC Article 5: Letters of Credit
- UCC Article 6: Bulk Sales
- UCC Article 7: Documents of Title
- UCC Article 8: Investment Securities
- UCC Article 9: Secured Transactions
In this post, we will provide you with Article 2 of UCC summary so you know exactly what it entails.
But first, let’s quickly look at its history.
Article 2 History
Article 2 Uniform Commercial Code is a statutory provision governing the sale of goods in the United States titled “U.C.C. – Article 2 – Sales (2002)”.
This provision was included in the UCC legislative text going back as early as 1951 intended to modernize the Uniform Sales Act originally approved by the National Conference of Commissioners on Uniform State Laws in 1906.
As of the writing of this post, the 1951 version of Article 2 is the official and most recent version of the text.
Article 2 Outline
Let’s break down U.C.C. Article 2 into its components.
Within Article 2 UCC, you have seven parts:
- Article 2 Part 1: Short Title, General Construction and Subject Matter
- Article 2 Part 2: Form, Formation And Readjustment of Contract
- Article 2 Part 3: General Obligation and Construction of Contract
- Article 2 Part 4: Title, Creditors And Good Faith Purchases
- Article 2 Part 5: Performance
- Article 2 Part 6: Breach, Repudiation And Excuse
- Article 2 Part 7: Remedies
UCC Article 2 Application
Article 2 of the UCC applies to the sale of goods intended to provide default rules to fill legal gaps in a contract between the contracting parties.
Article 2 deals with essentially all possible aspects in relation to the sale of goods addressing issues such as:
- The contracting process
- Instances where the contract is silent on a particular issue
- Offer and acceptance conflicts
- Contractual term conflict
- Prior business dealings
- Contract modifications
- Exchange of consideration
- Delivery method
- Risk of loss
The second provision of UCC is quite comprehensive when dealing with the sale of goods and deals with contract issues from start to finish.
With regards to its application, fundamentally, you need to have the sale of goods.
Let’s see what that entails.
Sale of Goods
So what is a “sale of good”?
According to Section 2-105 UCC, goods include all things that are “movable at the time of the contract for sale other than money in which the price is to be paid” along with “unborn young of animals and growing crop and other identified things attached to realty”.
Goods can be:
- Manufactured products
- Food items
- Other movable assets
Substantively, Article 2 UCC does not apply to service contracts, consulting services, professional services, or any other type of service contract.
As a result, if you do not have the sale of goods, then Article 2 will not apply.
Goods And Services Contracts
Article 2 of the UCC applies to the sale of goods predominantly but with services rendered subsidiarily or as an accessory to the sale of goods.
For example, if a contract is made of both goods and services, generally the courts will apply the “predominant factor test” to determine if the contract was primarily a sale of goods with services as the accessory or vice-versa.
For example, if your primary objective is to purchase a vehicle but you get some maintenance services on the side, your contract will be governed by article 2.
Another important substantive element to consider in assessing Article 2 of UCC is to whom it applies and how.
You have the notion of “Merchants” and “Non-Merchants”.
A merchant is a person or entity that is knowledgeable in the dealing of the goods offered whereas a non-merchant is a person that does not.
Since the law considers merchants (like companies involved in the sale of goods) are more sophisticated and knowledgeable than non-merchants, UCC imposes additional rules and obligations on them.
UCC Article 2 applies to the sale of goods between merchants or between a merchant and a non-merchant.
As such, merchants are required to follow certain standards of conduct when engaging in a business or commercial contract.
Transactions between non-merchants are not covered by Article 2 UCC.
UCC Article 2: Takeaways
So, what is Article 2 of the UCC?
What is the legal definition of UCC Article 2?
Let’s look at a summary of our findings.
UCC Article 2 Summary
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