1. Article 2 deals with the sale of goods. It does not deal with real property (real estate), services, or intangible property such as stocks and bonds. Thus, if the subject matter of a dispute is goods, the UCC governs. If it is real estate or services, the common law applies.
2. In some situations, the rules can vary depending on whether the buyer or the seller is a merchant.
- for instance, a contract for the sale of minerals, oil, or gas is a contract for the sale of goods if severance, or separation, is to be made to the seller
- also, a contract for the sale of growing crops or timber to be cut is a contract for the sale of goods regardless of who severs them from the land
Article 2A of the UCC
- covers similar issues for lease contracts
- defines a lease agreement as a lessor’s and lessee’s brain with respect to the lease of goods, as found in their language and as implied by other circumstances
- applies to all types of leases of goods
- special rules apply to certain types of leases, however, including consumer leases and finance leases
- Consumer Leases
- involves three elements :
1. A lessor who regularly engages in the business of leasing or selling.
2. A lessee (except an organization) who leases the goods “primarily for a personal, family, or household purpose.”
3. Total lease payments that are less than $25,000 [UCC 2A-103(1)(e)] - Finance Leases
- involves a lessor, a lessee, and a supplier
- the lessor buys or leases goods from the supplier and lease or subleases them to the lessee
- the lessee must perform and continue to make lease payments even if the leased equipment turns out to be defective
- the lessee must look almost entirely to the supplier for any recovery
Statute of Frauds
- under these provisions, sales contracts for goods priced at $500 or more and lease contracts requiring total payments of $1,000 or more must be in writing to be enforceable
- a writing, email, or other electronic record will be sufficient to satisfy the UCC’s Statute of Fraud as long as it :
1. Indicates that the parties intended to form a contract.
2. Is signed by the party (or agent of the party) against whom enforcement is sought. (Note that a typed name can qualify as a signature on an electronic record.) - merchants can satisfy the Statute of Fraud if, after the parties have agreed orally, one of the merchants sends a signed written (or electronic) confirmation to the other merchant within a reasonable time and must indicate the terms of the agreement, and the merchant receiving the confirmation must have reason to know of its contents
- unless the merchant who receives the confirmation gives written notice of objection to its contents within ten days after receipt, the writing is sufficient against the receiving merchant, even though she or he has not signed it
- three exceptions to writing requirements
- An oral contract for the sale of goods priced at $500 or more for the lease of goods involving total payments of $1,000 or more will be enforceable despite the absence of a writing in the circumstances described
1. The goods are specially manufactured for a particular buyer or specially manufactured or obtained for a particular lessee.
2. The goods are not suitable for resale or lease to others in the ordinary course of the seller’s or lessor’s business
2. The seller or lessor has substantially started to manufacture the goods or has made commitments for the manufacture or procurement of the goods. - in these situations, once the seller or lessor has taken action, the buyer or lessee cannot repudiate the agreement claiming the Statute of Frauds as a defense
1980 United Nations Convention on Contracts for the International Sale of Goods (CISG)
