Sale of Goods, and the Applicability and Advantages of the Uniform Commercial Code

In the United States, contract law is almost exclusively the domain of the States, ie. each individual state has its own contract law case law, and there would certainly be state-specific contract law rules.

The United States has a fairly consistent and standardized commercial code for the sale of goods. All states except Louisiana have adopted the Uniform Commercial Code (the “UCC”) and this provides a generally predictable framework for the formation and execution of contracts for merchants and persons dealing in goods with US counterparts.

Article 2 102 of the UCC defines the scope of application of the UCC. Governs all transactions where the object is “goods”. Case law on contracts for the provision of services and the sale of goods generally boils down to the “predominant purpose” test. The courts would examine the facts and circumstances to determine what the predominant purpose of the contract was. If the court determined that the predominant purpose of the contract was the provision of services, the UCC would not apply; on the other hand, if the court determined that the predominant purpose was the supply of the goods and the services were merely incidental, the court would apply the UCC. This is kind of an intuitive test, although in law it could get very detailed and could result in tediously long writings by lawyers, it could be explained very simply like this; If you buy a ton of nails for $1,000 and the contract provides for delivery to your doorstep, this contract would probably be one under the UCC, because you intended to purchase the nails and the delivery was merely incidental. But, on the other hand, if you hired a carpenter to fix your door, and he used a couple of nails, that contract would be governed by state-specific contract law (and not the UCC) because the intent was to hire the services of the carpenter to fix the door, and the nails used by the carpenter were merely props for that purpose.

The advantages of using the UCC are many, it provides an advanced and sophisticated mechanism for enforcing contracts and a fairly consistent set of cases across state lines for parties to judge the merits of their claims.

If you have a contract for the provision of services or one governed by the UCC and are contemplating a dispute with your counterparty, this article is a very rudimentary outline of the UCC, and you should not rely on it to make a legal decision.