A Guide for Business Owners (Part 2): Unlocking Article 2 of the Uniform Commercial Code (UCC)
A Guide for Business Owners (Part 2): Unlocking Article 2 of the Uniform Commercial Code (UCC)
February 02, 2023

By: Katelyn J. Dougherty, Esq.

As a business owner, it is crucial to acquaint yourself with the pertinent provisions of the Uniform Commercial Code (UCC) that directly impact your business operations. One such important article is Article 2 of the UCC, which specifically deals with the sale of goods.

Article 2 of the UCC establishes a comprehensive set of rules and regulations that govern the formation, enforcement, and interpretation of contracts for the sale of goods. It provides a standardized framework that helps facilitate smooth transactions and ensures fairness between buyers and sellers.

Here are some key points to understand about Article 2 of the UCC:

  1. Applicability: Article 2 applies to transactions involving the sale of goods. Goods are generally defined as tangible, movable items, including products, raw materials, and inventory.
  2. Contract Formation: Article 2 outlines the requirements for the formation of a valid sales contract. It covers essential aspects such as offer and acceptance, the consideration exchanged, and the terms and conditions of the agreement.
  3. Implied Warranties: Article 2 establishes certain implied warranties that automatically apply to sales contracts, even if they are not explicitly stated. These warranties include the warranty of title, the warranty of merchantability (the goods are fit for their ordinary purpose), and the warranty of fitness for a particular purpose (the goods will be suitable for a specific use).
  4. Risk of Loss: Article 2 of the UCC establishes guidelines for determining the point at which the risk of loss transfers from the seller to the buyer. This becomes particularly significant in situations where goods are damaged or destroyed prior to reaching the buyer.
  5. Remedies: In cases of contract breach, Article 2 of the UCC offers remedies for both buyers and sellers involved. These remedies encompass the right to pursue damages, seek specific performance (compelling the breaching party to fulfill their contractual obligations), or opt for the cancellation of the contract.

Gaining a thorough understanding of Article 2 of the UCC is essential for business owners involved in the sale of goods. By acquainting yourself with these provisions, you can establish legally sound sales contracts that safeguard your rights and obligations while minimizing the risk of disputes or legal complexities.

It is also important to emphasize that Article 2 of the UCC provides a framework of default rules for sales contracts. However, it must also be acknowledged that parties entering into a contract hold the power to modify or exclude these provisions through mutual agreement. Therefore, collaborating with your business attorney is crucial in navigating the intricacies of Article 2. Their expertise will prove invaluable in protecting your interests and ensuring that your agreements adhere to the relevant legal requirements.

Don’t have a business attorney? Get in touch with our team by emailing Info@harbourbusinesslaw.com.

This Blog was written by Founding Attorney, Katelyn Dougherty.

DISCLAIMER: This blog is for educational purposes only and does not offer nor substitute legal advice. This blog does not establish an attorney-client relationship and is not for advertising or solicitation purposes. Any of the content contained herein shall not be used to make any decision without first consulting an attorney. The hiring of an attorney is an important decision not to be based on advertisements or blogs. Harbour Business Law expressly disclaims any and all liability in regard to any actions, or lack thereof, based on any contents of this blog.

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