Select Page

Contracts II
University of Kansas School of Law
Drahozal, Christopher R.

UCC ARTICLE 2
I.                  Contract Formation
A.     Scope of Article 2
1.       §2-102 – Applies to transactions in goods
a.       Transactions
(1).           UCC does not specifically define transaction
(a).           Most of the substantive provisions are codified in terms of “buyer” and “seller,” thus indicating that the thrust of Art. 2 is limited to the sales of goods.
(b).           §2-101: Short title of Art. 2:   short title of UCC “-Sales”
(2).           Includes applicability to transactions like gifts, leases, bailments, transport of goods, production of goods, loans to purchase goods, secured transactions.
(3).           Executory and executed sale of goods transactions are covered.
(a).           I.e. Art. 2 applies to both the sale of goods and contracts for the sale of goods §2-106(1)
b.       Goods
(1).           §2-105: Definitions.
(a).            “Goods” means all things which are moveable at the time of identification to the K. §2-105(1). 
(i).   In the absence of explicit agreement, “identification” occurs when the K is made if the goods already exist and if they have been designated as the goods to be tendered under this K. §2-501(1)(a).
(ii).Otherwise, they are “identified” in essence at the earliest point in time at which they are designated in some manner by the seller as the goods that will be tendered under this K. §2-501(1)(b)
(b).           Must be tangible things. 
(c).           Does not include securities, future “rights,” houses, real estate, services or things in action. 
(d).           Sale of minerals (oil & gas) is sale of goods (if they are to be severed by the seller, otherwise they are realty), but pipeline is not covered b/c only providing transportation service. §2-107(1).
c.       Not anything in UCC that allows parties to contract Art. 2 into their agreement when it otherwise wouldn’t apply
2.       §1-103: Supplementation by Common Law
a.       Code overrules common law, but if the Code does not answer or cover the situation, the common law applies. Used as a “back-up” gap filler. §1-103.
b.       Role of common law in Code:
(1).           No definition in UCC for “breach,” “offer,” or “possession.”
(2).           Where UCC and Comments make it clear that UCC provision in question is not intended to affect certain related common-law doctrines, the parties must still look to the common law to define the parameters of that related doctrine.
3.       UCC as a Gapfiller – When not used as a gap filler (UCC superceded)
a.       §1-102: By agreement of the parties
(1).           §1-102(3): The effect of provisions of the UCC “may be varied by agreement, except as otherwise provided in this Act and except that the obligations of good faith, diligence, reasonableness and care prescribed by this Act may not be disclaimed…”
(2).           §1-201(3): “Agreement” means the bargain of the parties in fact as found in their language or by implication from other circumstances, including course of dealing, usage of trade or course of performance.
b.       §2-208: Course of Performance
(1).           §2-208(1) Requirements for course of performance to be relevant to determin

ge or skill peculiar to the practices or goods involved in the sale, or
(i).   Cmt. 2 to §2-104: many professionals may have knowledge of certain business practices (i.e. answering letters), but will not be considered a merchant unless engaged in the business practices in their “mercantile capacity”
(d).           to whom such knowledge or skill may be attributed by his employment of an agent or broker or other person who by his occupation holds himself out as having such skill.
(e).           Any business person who conducts a business transaction (e.g. opening the mail) is a merchant
(f).            Any business person who is acting out of their business capacity (for personal reasons) is not a merchant
(2).           Relevance of “merchant” distinction
(a).           Some provisions of Art. 2 apply only to merchants. E.g., 2-314(1) (implied warranty of merchantability); 2-201(2) – statute of frauds.
(b).           The merchant is held to a higher standard of good faith than the non-merchant throughout Art. 2. §2-103(1)(b) (definition of “good faith”).
(3).           Case example where attorneys = merchant, see page 8 of notes.
5.       Misc. Gap-fillers
a.       §2-305: Price
(1).           K can exist, even though price hasn’t been settled on.