What Are the Laws That Apply to a Contract for the Sale of Goods?

California Uniform Commercial Code

Contracts create private law, which means that they create legally binding obligations between parties to the agreement.  State laws and rule regarding contract formation also apply. For example, state laws determine what the remedy is for a breach of contract and what requirements must be met for a valid contract to be formed. The laws can differ from jurisdiction to jurisdiction, which can complicate things when you create a contract with parties from different states or when the contract affects interstate commerce.

To try to streamline the rules applicable to commercial contracts, a Uniform Commercial Code (UCC) has been written. Laws set forth in the UCC are the laws that apply to a contract for the sale of goods. An experienced Irvine, CA business law attorney can assist you in determining if the UCC applies to you and can help you to understand the relevant laws that will govern your contract.

Understanding the Laws that Apply to a Contract for the Sale of Goods

The Uniform Commercial Code (UCC) was drafted by the National Conference of Commissioners on Uniform State Laws and by the American Law Institute. It is a suggested code of laws, which does not become legally binding unless states adopt it.

All states in the United States have adopted the Uniform Commercial Code in full except Louisiana, which adopted the UCC in part. The benefits of universal adoption of the UCC is that the same laws apply to merchants no matter what state they do business in. This makes it much easier to enter into agreements and commercial transactions across state laws.

The UCC has nine articles in total.  Article 2 is the article that specifically establishes the laws that apply to a contract for the sale of goods.

UCC Article 2 applies only when tangible goods are sold or, in some cases, when the contract relates to a mix of goods and services.  If the contract is an agreement both for the sale of goods and for services to be performed, it is essential to determine what the predominant element of the contract is in order to establish whether the laws that apply to a contract for the sale of goods will be applicable.

The UCC Article 2 section addresses some of the common problems that arise when contracts for sale are created. For example, when two companies have their own contract forms, a battle of the forms can arise. One party to an agreement may send one form and the other will send back a similar one. A contract may still be created even without perfect agreement, but the terms of the contract may not be clear if there are different provisions on the various forms used.  The UCC provides details on which terms will apply in this situation.

If you are entering into a contract for the sale of goods, you need to know what the UCC Article 2 provisions are and how they differ from state common laws applicable to other types of contracts. An experienced Irvine, CA business law attorney can help.  Contact Brown & Charbonneau, LLP today to schedule a consultation about your business agreement.