Introduction to UCC Article 2

• Author: autor
• Pages: 15-30

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Chapter 2. Introduction to UCC Article 2

2.1. Scope of Article 2: Transactions in Goods. Article 2 of the Uniform Commercial Code

applies to transactions in goods. § 2-102.

2.1.1. One of the purposes of this class is to teach you how to read and use statutes. In

some areas of law, such as torts, you rely more heavily on case law than on statutes in

giving advice and coming to conclusions. “Sales of goods” is an area of law where you

must learn to begin with the statute and the Official Comments. Note that while the

Official Comments are extremely valuable for purposes of interpretation, in most

jurisdictions they have not been enacted by the legislature and are only persuasive

authority. Cases become important when a particular UCC provision is subject to more

than one interpretation.

2.1.2. You can seldom rely on a single statute when applying the UCC. In applying a

particular provision of Article 2, you often have to refer to other provisions of Article 2,

or to the general provisions of Article 1. Always look at any applicable definitions, which

may be in Article 1 or Article 2, and at the cross-references to other UCC sections that

are contained in or immediately follow the provision you are reading.

2.1.3. Article 2 applies to “transactions in goods.” § 2-102. Article 2 does not apply to

transactions involving real property or services. Our first step is to determine what

constitutes a “good” under Article 2. For a comprehensive compilation of federal and

state cases, see Sonja A. Soehnel, Annotation, What Constitutes "goods" Within the

Scope of UCC Article 2, 4 A.L.R.4th 912 (1981).

Problem 2-1. Where are “goods” defined for purposes of Article 2? Identify the statutory

requirements that must be met before an item can fall within the definition of “goods.”

Problem 2-2. Seller is in the business of creating neon signs. Buyer offers seller $1,000 to create

a neon sign that says “Stockman’s Bar” and seller promises to create the sign within 30 days. Is

this a contract for the sale of goods?

Problem 2-3. What three items are specifically excluded from the definition of goods?

Problem 2-4. In general, are things firmly affixed to the land at the time of the contract for sale

subject to Article 2? Under § 2-107, what categories of things attached to realty fall within the

definition of “goods”?

Problem 2-5. Now that you’ve mastered the definition of “goods,” let’s apply it. Do the

following items fall within the definition of “goods” for purposes of Article 2:

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(1) the sale of cookies by a girl scout?

(2) the sale of television programming?

(3) the sale of a yellow page ad?

(4) the sale of electricity by a utility company?

(5) the sale of a debt owed to you?

(6) the sale of a mobile home located on blocks on a dealer’s lot?

(7) the sale of a mobile home embedded in a cement foundation on land, which the buyer

subsequently intends to move?

(8) the sale by a farmer in December of wheat which he will plant next May?

(9) the sale of Confederate money?

(10) the sale of tickets to the Final Four basketball play-offs?

(11) the sale of the answer sheet to the Sales and Leases final exam?

(12) the sale of water by an owner of land on which an artesian well is located to a bottler

who will pump 100,000 gallons per month from the spring?

Research Assignment 2-1. Does the sale of blood by a law student to a blood bank fall within

the definition of “goods” for purposes of Article 2? Many jurisdictions have a statute on point

that you may wish to research. See, e.g., California Health and Safety Code § 1606, which

provides:

Blood, etc.; processing, distribution; service, not sale

The procurement, processing, distribution, or use of whole blood, plasma, blood products,

and blood derivatives for the purpose of injecting or transfusing the same, or any of them,

into the human body shall be construed to be, and is declared to be, for all purposes

whatsoever, the rendition of a service by each and every person, firm, or corporation

participating therein, and shall not be construed to be, and is declared not to be, a sale of

such whole blood, plasma, blood products, or blood derivatives, for any purpose or

purposes whatsoever.

What reasons do you believe the California legislature considered in enacting this “blood shield”

statute?

2.1.4. Section 2-102 specifies that Article 2 applies to “transactions in goods.”

Transaction is not defined, but is undoubtedly a broader concept than a “sale.” Clearly,

sales of goods are governed by Article 2, but what about gifts of goods? Leases of goods?

Barter transactions? See § 2-304.

2.1.4.1. Most operative provisions of Article 2 apply only to sales of goods. For

example, the definition of “contract” and “agreement” under § 2-106 are limited

to those relating to the present or future sale of goods. Thus, wherever the term

“contract” or “agreement” is used in Article 2, leases of goods are by definition

excluded. Similarly, most Article 2 provisions specifically refer to a contract for