6.3 UCC Article 2: Sales of Goods

Article 2 of the Uniform Commercial Code (UCC) is the single most tested statute in the Contracts subject area of the NALA Certified Paralegal (CP) Knowledge Exam. The exam loves the places where the UCC departs from common law. Learn the divergence points below and you can answer most Article 2 questions by asking one question first: does this contract involve goods?

Goods vs. Services: The Threshold Question

Goods are all things movable at the time of identification to the contract — tangible items from grain to forklifts. Goods include growing crops, timber to be severed, and unborn animals. Goods do not include money (as the price), investment securities, real estate, or services.

For mixed contracts (goods plus services), courts apply the predominant-purpose test: which element dominates? A contract to supply and install a custom HVAC system is usually a goods contract with incidental installation; a contract to paint a portrait, supplying canvas and paint, is a service contract with incidental goods. The classification controls everything downstream — Statute of Frauds threshold, battle of the forms, warranties, and the tender rule.

A merchant is a person who deals in goods of the kind, or who by occupation holds themselves out as having knowledge or skill peculiar to the goods or practices involved. Many Article 2 rules apply only to merchants, and the exam tests that status line constantly.

Firm Offers (UCC § 2-205)

At common law, any offer is revocable until accepted unless supported by consideration (an option). Under UCC § 2-205, a firm offer is irrevocable without consideration if: (1) made by a merchant, (2) to buy or sell goods, (3) in a signed writing, and (4) giving assurance it will be held open. It stays open for the time stated — or a reasonable time if none — but never longer than three months, even if the offer says longer. If the offeree supplies the form containing the assurance term, the merchant-offeror must separately sign that term.

Battle of the Forms (UCC § 2-207)

Common law's mirror-image rule made an acceptance with any different term a counteroffer. Modern commerce destroyed that model: buyers and sellers exchange purchase orders and acknowledgments whose boilerplate never matches. UCC § 2-207 fixes it:

• A definite and seasonable expression of acceptance operates as an acceptance even though it states additional or different terms, unless acceptance is expressly conditional on assent to those terms.
• Between merchants, additional terms become part of the contract unless: (a) the offer expressly limits acceptance to its own terms; (b) the new terms materially alter the contract (arbitration clauses and warranty disclaimers are classic material alterations); or (c) the offeror objects within a reasonable time.
• If the writings don't form a contract but the parties perform anyway (ship and accept goods), a contract exists by conduct, and its terms are those on which the writings agree plus UCC gap-fillers — the knock-out rule drops conflicting terms entirely.

Contrast sharply with common law: under the mirror-image rule, a non-matching response is a counteroffer, and performance after it adopts the counteroffer's terms (the "last shot" rule). The exam frequently asks which regime governs — again, goods or services?

UCC Statute of Frauds ($500)

UCC § 2-201 requires a writing sufficient to indicate a contract for sale and signed by the party against whom enforcement is sought for goods priced at $500 or more. The quantity term is the one term the writing must get right. Key exceptions — no writing needed:

1. Specially manufactured goods not suitable for sale to others, once the seller has substantially begun making them;
2. Judicial admission — the party admits in pleadings or court that a contract existed (up to the quantity admitted);
3. Payment or delivery — enforceable to the extent goods have been paid for or received and accepted;
4. Merchant's confirmatory memo — between merchants, if one sends a written confirmation and the recipient has reason to know its contents and does not object within 10 days, the writing requirement is satisfied against both.

Compare the common-law Statute of Frauds: it covers land, contracts that cannot be performed within one year, and suretyship promises — with no dollar threshold for goods because goods belong to the UCC.

Implied Warranties

• Implied warranty of merchantability (§ 2-314) — implied in every sale by a merchant of goods of the kind: the goods must be fit for the ordinary purposes for which such goods are used, adequately contained and labeled, and conform to the label. A ladder that collapses under normal use breaches it. A casual seller (your neighbor selling a used bike) gives no such warranty.
• Implied warranty of fitness for a particular purpose (§ 2-315) — arises when (1) the seller (merchant or not) has reason to know the particular purpose for which the buyer needs the goods, (2) the seller knows the buyer is relying on the seller's skill or judgment, and (3) the buyer in fact relies. A paint-store clerk (even a non-merchant seller of paint in some framings) recommending paint for a boat hull creates this warranty if the buyer relies.
• Express warranties (§ 2-313) — created by any affirmation of fact, description, or sample that is part of the basis of the bargain. Puffery ("the best car in town") creates no warranty.

Warranties can be disclaimed — conspicuous "as is" language eliminates implied warranties — and the Magnuson-Moss Warranty Act adds federal consumer-protection overlay for written consumer-product warranties.

Perfect Tender Rule and Cure

The UCC's biggest divergence from common law: under § 2-601, if goods or their tender of delivery fail in any respect to conform to the contract, the buyer may reject the whole, accept the whole, or accept commercial units and reject the rest. No substantial performance doctrine here.

But the seller has a right to cure (§ 2-508): if the delivery time has not expired, the seller may seasonably notify the buyer and make a conforming tender within the contract time. Even beyond the contract time, the seller gets a further reasonable time to cure if it had reasonable grounds to believe the tender would be acceptable (for example, because of prior dealings or trade usage). The buyer who rejects must do so in good faith and within a reasonable time, and must seasonably notify the seller of the particular defects.

Paralegal Scenario

Your client, a restaurant-equipment merchant, emails a signed quote to a restaurant: "1,200 lbs of commercial coffee urns at $4,800 total — offer held open 60 days." Ten days later the client wants to raise the price. It cannot: a signed merchant firm offer for goods is irrevocable for the stated period (under three months) without any consideration. And because the price is $4,800 — above $500 — you should confirm a signed writing exists before advising the client on enforceability in either direction.