Uniform Commercial Code on Formation of Sales and Lease Contracts

• The UCC applies to an ordinary sale or lease of goods (Article 2 and 2A respectively). Article 2 (sales) and Article 2A (leases) are essentially the same. Some variations occur because a sale involves a transfer of title as opposed to a lease, which involves a transfer of possession. 

• Article 2 and Article 2A deal with the sale and lease of goods respectively for any dollar amount. Goods are defined as property that is tangible and moveable. 

• Article 2 applies to both merchants and non-merchants (casual sellers) and some special rules apply to sales contracts made between merchants. 

• The UCC has relaxed the rules related to sales transactions that originally were governed by the common law. Many of the technical requirements found under the common law have been removed. It is now easier to form a sales contract. Article 2, however, insists that the parties perform in good faith and avoid unfair dealings such as might exist between a merchant (a professional) and an inexperienced contractor. 

• The statute of frauds under the UCC is less restrictive and allows oral contracts for the sale of goods under certain circumstances (see Chapter 15 of the text). In addition, the statute of frauds requirement of the written memorandum as evidence of a sale has been greatly relaxed under the UCC. There is only a need of “some writing”—a check, a letter, an invoice, a fax, an e-mail, etc.—as evidence that a sale took place. The writing need name only the quantity and term, and be signed by the party to be charged. 

• More and more contracts are being formed online especially business-to-business sales contracts. Existing contract laws apply to online transactions but new laws have also been created to fit circumstances where existing laws will not fit online transactions.