For most of history, contract law has been common law. Instead of having written statutes that set the rules, the laws have been handed down in opinions written by judges. In the mid-20th century, however, a panel of legal scholars put together and proposed a uniform law, known as the Uniform Commercial Code (the “UCC”), which included a specific section (Article 2) that set forth the laws governing contracts for the sale of goods. The UCC has been adopted in whole or in part by every state except Louisiana.
The definition of goods in the UCC is somewhat vague—goods are anything that is movable at the time they are identified in the contract, with some exceptions. Neither money nor investment securities are considered to be goods.
Article 2 contains specific provisions addressing the key issues related to contracts for the sale of goods, including:
Article 2 imposes a duty of good faith on both parties to a contract for the sale of goods, with the duty applicable at all times. Article 2 sets forth some specific warranties regarding the sale of goods, and allows a party to refuse to perform if certain components are considered to be “unconscionable.”
The U.S. Supreme Court has held that, where state law and federal law conflict, the federal law takes precedence. In the laws governing the sales of goods, there are only a few instances where a federal law supersedes the Uniform Commercial Code:
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