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Subject of lw provided tht it dels with goods nd not services

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UNIT 10. UNIFORM COMMERCIAL CODE

The U.C.C., in force in 49 of the 50 states of the United States (several sections are valid in Louisiana), represents an effort to codify "The Law Merchant". The purposes of the Code are:

  1.  Simplify, clarify and modernize the laws governing commercial
    transactions;
  2.  Permit continued expansion of commercial practices through
    custom, usage and agreement of the parties;
  3.  Make a law uniform among the various jurisdictions.

It was also hoped to encourage resolution of commercial conflicts with a minimum of litigation. This purpose has largely failed.

The Code states that it is to be liberally construed and applied to promote the purposes. Contract Law uses strict construction. The Code wants people to do business while Contract Law forces people in business to do contracts.

The Code treats a "commercial transaction" as a single subject of law provided that it deals with goods and not services. There may be a contract for a sale followed by a sale (Article 2); giving a check or negotiable instrument for payment (Article 3); shipping or storing of goods needing documents of title (Article 7); security interests in the goods being sold (Article 9); leases of goods (Article 2A); and bulk sales (Article 6).

The Code says: "This Act is drawn to provide flexibility so that, since it is intended to be a semi-permanent piece of legislation, it will provide its own machinery for expansion of commercial practices." This is called "open-ended drafting". It recognizes that law tends to restrict itself, but people want to do business; so it tries to let them do business.

The Code came with official comments and has a permanent editorial board, which may even file amicus curie briefs in important cases.

The Code allows a court to fill in many contract terms, if they are missing, based upon usage of the trade, prior business dealings between the parties, good faith, commercial reasonableness, due diligence, investing with apparent authority, course of performance, reasonable care and similar terms.

Contract Law wants a head-on collision between the parties. After the terms "offer" and "acceptance" on your list of terms, all remaining

 terms are used to avoid finding a contract to exist. The Code accepts the desire to do business rather than to do contracts. Thus the Code asks: "Did they want to do business? If so, is there enough information to determine the nature of the business? If so, the Code and Courts will supply what is missing."

While the Code is designed for the merchant community, it also has provisions for the consumer: warranty provisions, provisions concerning passing valid title to a bonafide consumer purchaser for value if the merchant has no title to pass, and a right to cancel a contract within three days of signing under certain circumstances.

Lack of definiteness does not preclude a contract as the court may fill in terms. Multiple documents, none of which are signed by both parties, may be considered and from them a contract created. Place of delivery, time of delivery, manner of delivery, payment time or place, and manner of payment are all given presumptions should a party fail to provide for them in the contract. Length of term, contracts calling for the output or requirements of the other party, exclusive dealings, issues of assignment and delegation, and issues of quality also have presumptions. Mutuality of consideration is not needed but mutuality is considered in unconscionable clause situations. The Code has its own statute of frauds and the parole evidence rule is still in effect, although in modified form. Some things cannot be waived by the parties and any contract terms purporting to do so are automatically void. The issue of who has the title is of very little importance under the Code.

For your purposes, know three things:

  1.  The U.C.C. will strive to make a contract for you. "Commercially
    reasonable" is the key concept and reasonable means a jury question if
    the parties cannot resolve the matter between them.
  2.  All goods carry an automatic warranty of merchantability (that a
    product is fit for the normal use for which that product is designed) and
    an automatic warranty of fitness for particular purpose (a purpose
    which the seller knew or should have known was anticipated by a
    buyer). The warranties form the basis for strict product liability in
    Contract Law. If the goods fail to meet their purpose and a defect is
    shown, there is no need to establish how or why the defect came about -
    the purchaser wins. This is far simpler than in Tort Law where negli
    gent design or construction must be shown to recover.

(3) While all of the Contract Law and equity remedies still exist, the
Code has added a number of remedies designed to let the seller (if the

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