The Uniform Commercial Code (UCC) is a set of uniform laws crafted to promote consistency in commercial transactions. It has 9 articles covering various aspects of commercial law. Article 1 provides definitions and general principles. Article 2 governs sales of goods and related warranties. Article 3 governs negotiable instruments like checks and promissory notes. The UCC aims to regulate commercial transactions consistently across state lines and provide remedies for issues that may arise.

1. [UCC]
LA3100 Lear ning Plan 5

2. [What is the UCC?]
 Uniform laws crafted by the American Law
Institute and the National Conference of
Commissioners on Uniform State Laws
 Purpose is to promote consistency in sales
contracts in interstate commerce.
 There are 9 chapters, called “Articles”, covering
sales of goods, warranties, forms of payment,
titles, leases and financing of goods.
LA3100L P 5

3. Lear ning Plan 5LA3100
ARTICLE 1
[UCC]

4. [ARTICLE 1]
 Provides definitions and general overview of the
purpose and scope for all 9 Articles.
 Extends general contract law to cover
agreements made across state lines. [ 1–103]
 “Agreement” distinguished from “contract,” to
include express terms and implied conditions
based upon course of conduct & usage of trade.
1 – 303.
 Overall obligation to act in “good faith”: “honesty
in fact and fair dealing. [ 1–201(b)(20)]
LA3100L P 5

5. Lear ning Plan 5LA3100
ARTICLE 2
[UCC]

6. [ARTICLE 2]
 Applies to transactions in goods;
 Does not apply to security interests;
 Regulates every phase of a transaction for the
sale of goods and provides remedies for
problems that may arise.
LA3100L P 5

7. [WHEN TO APPLY ARTICLE 2]
 GOODS: “All things movable and identified to the
contract of the sale. See 2-105 of the UCC.
 A good must be existing and one of the objects
that is or will be exchanged. See 2-106(1) & 2-
501(1) of the UCC.
 Article 2 regulates transactions between
merchants and consumers and those solely
between merchants are regulated by Part Two.
 All transactions that are for more than $500 must
be in writing. See 2-201(1) of the UCC.
LA3100L P 5

8. [“HYBRID” GOODS COVERED?]
 Majority rule: If the “predominant purpose” of the
whole transaction was the sale of goods, Article 2
will be applied to the whole (if goods are involved,
most courts apply Article 2)
 Minority rule: Article 2 applies to the sale of goods
aspect of the transaction only (problems arise in
applying two different measures of damages)
LA3100L P 5

9. [ARTICLE 2 WARRANTIES]
 Express Warranty
 Implied Warranty of Merchantability
 Implied Warranty of Fitness for a
Particular Purpose
LA3100L P 5

10. [ARTICLE 2 WARRANTIES]
Implied Warranty of Merchantability
 When a person purchases a product from a
merchant, the person can expect that the product
is "merchantable" under UCC 2-314.
 This warranty provides that goods are of a quality
equal to that which is generally acceptable
among those who deal in such goods AND are
generally fit for the ordinary purpose for which
such goods are used.
LA3100L P 5

11. [ARTICLE 2 WARRANTIES]
Implied Warranty of Fitness for a
Particular Purpose
 The seller knows, or has reason to know,
that the buyer of the goods intends to use
such goods for a particular purpose, and
 The buyer relies upon the seller's skill in
select or provide such goods.
LA3100L P 5

12. [CONTRACT ENFORCEMENT
Lear ning Plan 3LA3100
REMEDIES

13. [ARTICLE 2 REMEDIES]
 For breach when seller fails to deliver:
Direct economic loss, specific
performance, replevin, refund
 For breach when seller delivers non-
conforming goods:
Incidental damages, consequential
damages, warranty damages
LA3100L P 5

14. [ARTICLE 2 REMEDIES]
LA3100L P 5
Incidental damages:
• Result from the seller's breach.
• Include expenses reasonably incurred in
inspection, receipt, transportation and care and
custody of goods rightfully rejected, any
commercially reasonable charges, expenses or
commissions in connection with effecting cover,
• And any other reasonable expense incident to the
delay or other breach.

15. [ARTICLE 2 REMEDIES]
LA3100L P 5
Consequential damages:
• Include any loss resulting from general or
particular requirements and needs of which
the seller at the time of contracting had
reason to know and which could not
reasonably be prevented by cover or
otherwise; and
• Injury to person or property proximately
resulting from any breach of warranty.

16. [ARTICLE 2 REMEDIES]
LA3100L P 5
• Compensatory damages:
Puts the nonbreaching party in the monetary
position that the party would have been had
no breach occurred and the contract had
been fully performed.
• Equitable remedies:
When monetary damages insufficiently
remedy, specific performance can order the
unique goods to be produced.

17. [ARTICLE 2 DEFENSES]
A manufacturer or merchant that sells a product
may avoid liability, if circumstances exist for a
valid defense:
 Assumption of Risk
 Contributory Negligence
 Comparative Negligence
LA3100L P 5

18. Lear ning Plan 5LA3100
ARTICLE 3
[UCC]

19. [ARTICLE 3]
 Regulates "negotiable instruments"
 An unconditional promise or order to pay a fixed
amount of money, with or without interest or other
charges described in the promise or order, if it:
(1) is payable to bearer or to order at the time it is
issued or first comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or instruction
by the person promising or ordering payment to do any
act in addition to the payment of money . . .
LA3100L P 5

20. [ARTICLE 3]
Negotiable instruments are generally
divided into two categories:
1. Instruments containing an order to pay
(Ex: drafts and checks)
2. Instruments containing a promise to pay.
(Ex. promissory notes and certificates of
deposit)
LA3100L P 5

21. [ARTICLE 3]
Definitions:
 Draft: drawer orders the drawee to pay money to a payee.
 Check: draft drawn upon a bank. An instrument stating "Pay to the
order of”.
 Promissory note: promise by the maker to make payment to the
payee at a specified time in the future or upon demand by the maker.
 Certificate of deposit: is a promissory note by a bank or other
financial institution in which the institution acknowledges that it has
received money from the depositor and that it will repay the money,
plus interest, as a set time in the future.
 All negotiable instruments are subject to a Statute of Frauds
requirement.
LA3100L P 5

22. [UCC]
LA3100 Lear ning Plan 4