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Article 2 of the UCC: Definition & Terms

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  • 0:05 The Uniform Commercial Code
  • 1:11 Article 2
  • 2:04 Buyers and Merchants
  • 3:44 Sellers and Sales
  • 5:24 Lesson Summary
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Lesson Transcript
Instructor: Ashley Dugger

Ashley is an attorney. She has taught and written various introductory law courses.

Article 2 of the Uniform Commercial Code (UCC) applies specifically to contracts for the sale of goods. This lesson explains Article 2 of the UCC and defines some common terms found in Article 2.

The Uniform Commercial Code

I'm starting my own business! I stitch tailgating tents out of college flags. My unique hobby has turned into a home business, and now I've opened sales to the public.

For businesses that conduct sales, it's especially helpful to be familiar with the Uniform Commercial Code, or UCC. The UCC is a uniform act that covers sales and other commercial transactions. The UCC is a model, meaning it isn't law. It's a guide meant to encourage uniformity, or consistency, between state laws.

All 50 states have adopted at least a part of the UCC, making those portions of the UCC law in those particular states. Keep in mind, however, that different states have adopted different portions and sometimes even different versions. This means that state laws regarding commercial contracts aren't exactly uniform, but they are usually similar.

Article 2

As a salesperson, I'll especially want to be familiar with the UCC's Article 2. This article is simply entitled 'Sales' and specifically addresses contracts for the sale of goods. Article 2 makes up a large portion of the UCC; it contains over 100 sections.

My college tents are goods under the UCC because they are movable at the time of the contract. A 'good' is any type of movable personal property identified at the time of the agreement, such as a car or a pencil. 'Goods' are also sometimes called 'chattels.' Even unborn animals or crops are goods. However, land, real estate and investment securities are not goods.

Buyers and Merchants

Let's say that Tess is a recent graduate of the University of Texas. She plans to attend most home football games and wants a UT tent for tailgating, so she places an order with me. Tess orders two tents. She wants one for herself and one for a friend.

Under the UCC, Tess is a buyer because she is the person who contracts to buy goods. I am a merchant because I am a person who regularly deals in goods of this kind. My occupation is manufacturing and selling college tents. I, therefore, am a person with knowledge and skill regarding college tents.

The UCC purposely holds merchants, or persons with knowledge or skill peculiar to the goods involved in the transaction, differently than buyers. The UCC deliberately places a higher standard on merchants in an effort to protect buyers. For example, under the UCC, merchants must deal using good faith. This means dealing with others honestly and using any industry standards regarding fairness.

Let's say that custom tent making usually calls for a 50% deposit and up to 12 weeks manufacturing time. I can't then, barring unusual circumstances, require full payment up front and take a year to build each tent. This wouldn't be considered fair, or the use of 'good faith' in my trade.

Sellers and Sales

In my agreement with Tess, I'm also the seller because I'm the person who sells or contracts to sell goods. Notice that a seller is also a merchant, but not all merchants are sellers.

Remember that a merchant is someone who deals with this type of goods in some way and, therefore, is presumed to know more about the goods than a typical buyer. For example, let's say I have one employee named Ernie. Ernie's job is to find and purchase college flags for me so that I can make the tents. Ernie is a merchant because he's in the college tent business, even though he's not a seller. However, under the UCC, I am both a merchant and a seller.

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