2. [What is the UCC?]
Uniform laws crafted by the American Law
Institute and the National Conference of
Commissioners on Uniform State Laws
Purpose is to promote consistency in sales
contracts in interstate commerce.
There are 9 chapters, called “Articles”, covering
sales of goods, warranties, forms of payment,
titles, leases and financing of goods.
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4. [ARTICLE 1]
Provides definitions and general overview of the
purpose and scope for all 9 Articles.
Extends general contract law to cover
agreements made across state lines. [ 1–103]
“Agreement” distinguished from “contract,” to
include express terms and implied conditions
based upon course of conduct & usage of trade.
1 – 303.
Overall obligation to act in “good faith”: “honesty
in fact and fair dealing. [ 1–201(b)(20)]
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6. [ARTICLE 2]
Applies to transactions in goods;
Does not apply to security interests;
Regulates every phase of a transaction for the
sale of goods and provides remedies for
problems that may arise.
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7. [WHEN TO APPLY ARTICLE 2]
GOODS: “All things movable and identified to the
contract of the sale. See 2-105 of the UCC.
A good must be existing and one of the objects
that is or will be exchanged. See 2-106(1) & 2-
501(1) of the UCC.
Article 2 regulates transactions between
merchants and consumers and those solely
between merchants are regulated by Part Two.
All transactions that are for more than $500 must
be in writing. See 2-201(1) of the UCC.
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8. [“HYBRID” GOODS COVERED?]
Majority rule: If the “predominant purpose” of the
whole transaction was the sale of goods, Article 2
will be applied to the whole (if goods are involved,
most courts apply Article 2)
Minority rule: Article 2 applies to the sale of goods
aspect of the transaction only (problems arise in
applying two different measures of damages)
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9. [ARTICLE 2 WARRANTIES]
Express Warranty
Implied Warranty of Merchantability
Implied Warranty of Fitness for a
Particular Purpose
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10. [ARTICLE 2 WARRANTIES]
Implied Warranty of Merchantability
When a person purchases a product from a
merchant, the person can expect that the product
is "merchantable" under UCC 2-314.
This warranty provides that goods are of a quality
equal to that which is generally acceptable
among those who deal in such goods AND are
generally fit for the ordinary purpose for which
such goods are used.
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11. [ARTICLE 2 WARRANTIES]
Implied Warranty of Fitness for a
Particular Purpose
The seller knows, or has reason to know,
that the buyer of the goods intends to use
such goods for a particular purpose, and
The buyer relies upon the seller's skill in
select or provide such goods.
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13. [ARTICLE 2 REMEDIES]
For breach when seller fails to deliver:
Direct economic loss, specific
performance, replevin, refund
For breach when seller delivers non-
conforming goods:
Incidental damages, consequential
damages, warranty damages
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14. [ARTICLE 2 REMEDIES]
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Incidental damages:
• Result from the seller's breach.
• Include expenses reasonably incurred in
inspection, receipt, transportation and care and
custody of goods rightfully rejected, any
commercially reasonable charges, expenses or
commissions in connection with effecting cover,
• And any other reasonable expense incident to the
delay or other breach.
15. [ARTICLE 2 REMEDIES]
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Consequential damages:
• Include any loss resulting from general or
particular requirements and needs of which
the seller at the time of contracting had
reason to know and which could not
reasonably be prevented by cover or
otherwise; and
• Injury to person or property proximately
resulting from any breach of warranty.
16. [ARTICLE 2 REMEDIES]
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• Compensatory damages:
Puts the nonbreaching party in the monetary
position that the party would have been had
no breach occurred and the contract had
been fully performed.
• Equitable remedies:
When monetary damages insufficiently
remedy, specific performance can order the
unique goods to be produced.
17. [ARTICLE 2 DEFENSES]
A manufacturer or merchant that sells a product
may avoid liability, if circumstances exist for a
valid defense:
Assumption of Risk
Contributory Negligence
Comparative Negligence
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19. [ARTICLE 3]
Regulates "negotiable instruments"
An unconditional promise or order to pay a fixed
amount of money, with or without interest or other
charges described in the promise or order, if it:
(1) is payable to bearer or to order at the time it is
issued or first comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or instruction
by the person promising or ordering payment to do any
act in addition to the payment of money . . .
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20. [ARTICLE 3]
Negotiable instruments are generally
divided into two categories:
1. Instruments containing an order to pay
(Ex: drafts and checks)
2. Instruments containing a promise to pay.
(Ex. promissory notes and certificates of
deposit)
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21. [ARTICLE 3]
Definitions:
Draft: drawer orders the drawee to pay money to a payee.
Check: draft drawn upon a bank. An instrument stating "Pay to the
order of”.
Promissory note: promise by the maker to make payment to the
payee at a specified time in the future or upon demand by the maker.
Certificate of deposit: is a promissory note by a bank or other
financial institution in which the institution acknowledges that it has
received money from the depositor and that it will repay the money,
plus interest, as a set time in the future.
All negotiable instruments are subject to a Statute of Frauds
requirement.
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When a person purchases a product, the product may come with a warranty that is expressly made by the manufacturer. Often, such warranties are printed on the package or in the literature that accompanies the product. For example, many products contain express warranties such as, "Guaranteed against defects in materials or workmanship for a period of 90 days from purchase." If a product is defective, the purchaser and, in most cases, the user of a product, may recover damages if injured by the defect. Implied Warranty of Merchantability (UCC 2-314) Article 2 of the Uniform Commercial Code imposes an implied warranty of merchantability on products sold by a merchant who deals in the type of products sold. The warranty is not an express warranty, because it is not expressed either verbally or in writing. Rather, it is implied. Under the UCC, when a person purchases a product from a merchant, the person can expect that the product is "merchantable" under UCC 2-314, which provides that goods are of a quality equal to that which is generally acceptable among those who deal in such goods and are generally fit for the ordinary purpose for which such goods are used. Implied Warranty of Fitness for a Particular Purpose (UCC 2-315) Article 2 of the Uniform Commercial Code also imposes an implied warranty of fitness for a particular purpose when the seller knows, or has reason to know, that the buyer of the goods intends to use such goods for a particular purpose and the buyer relies upon the seller's skill in select or provide such goods.
Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.Consequential damages resulting from the seller's breach include(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and(b) injury to person or property proximately resulting from any breach of warranty.
Consequential damages resulting from the seller's breach include(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and(b) injury to person or property proximately resulting from any breach of warranty.