When Does the UCC Apply? | What Types of Issues Does the UCC Regulate?
As long as humans have engaged in commerce, contracts have existed, in some form or other. For centuries, the rules governing contracts were handed down by judges, compiled in written opinions known collectively as the “common law.” Those laws often varied significantly from state-to-state, making interstate commerce somewhat challenging.
In the late 19th century, legal professionals came together and drafted certain “uniform” laws, including the Uniform Commercial Code (UCC), which set forth commonly accepted rules relating to specific subjects. The UCC contains laws governing many aspects of commerce, including some types of contracts.
Article 2 of the Uniform Commercial Code
One of the most complex of all uniform laws, Article 2 of the UCC, labeled “Sales,” contains more than 100 provisions delineating many aspects of a valid and enforceable contract. It is important to understand, though, that the provisions of Article 2 apply only to the sale of “goods.” Agreements involving services are still interpreted according to the common law.
An Overview of Article 2 of the Uniform Commercial Code
Article 2 addresses virtually every aspect of a valid sales agreement, including:
- The form a sales contract must take to be valid—Article 2 identifies those types of sales agreements that must be in writing. It also identifies what must and what need not be included in the writing.
- How a valid and enforceable contract is formed—Article 2 identifies what must happen to form a contract (offer and acceptance) and when the agreement becomes enforceable
- How a contract may be changed or modified—Article 2 establishes when an agreement may be amended and the what the parties must do
- Specific contract obligations—Article 2 includes provisions further defining each party’s responsibilities under a contract, including rules about the allocation of risk in a contract, the need (or lack thereof) for specific price terms, rules governing warranties attached to a contract
- Performance—The UCC identifies when performance is in compliance with an agreement and when it is non-conforming
- Breach—Article 2 identifies when the actions (or inactions) of a party constitute a violation of the terms of a contract
- Remedies—The UCC addresses how the parties to a contract will be made whole, reimbursed or compensated when another party fails to perform in accordance with the terms of the agreement.
Contact Attorney Howard N. Sobel
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