Professor William R. Long 1/18/05
Getting our Bearings
The purpose of these notes is twofold. (1) They are intended for students in my Sales Law class at Willamette University College of Law. You should read them on a frequent basis, as I will add to them and clarify concepts we discuss in class as well as basic Sales Law principles in general. (2) They are intended also for a larger public which wants to learn about basic principles of Sales Law. In this regard the notes are meant to be introductory to the subject as well as to the subject taught using a particular casebook (Benfield's Sales: Cases and Materials, 4th Ed. 2004). I will also present some examples or problems here to see how to apply the Code (Article 2, Uniform Commercial Code) to a transaction. The remainder of this mini-essay is concerned with preliminaries.
Four points should get us started. First, Article 2 of the UCC has been revised in the past few years (approved by the American Law Institute and the National Conference of Commissioners on Uniform State Law in 2003) but will probably not, in its present form, be approved by any of the states. The UCC is a "uniform law" developed by these law-improvement oriented groups but does not become law until enacted by individual state legislatures. Article 1 of the UCC was revised in 2001, has already been adopted in a few states and will probably be universally adopted within the decade. Thus, I will refer throughout to the "new" Article 1 and the "old" Article 2 to refer to what I think will be the legal situation in the near future.
Second, you should take a moment to try to understand the "flow" of Article 2. It consists of about 125 paragraphs, divided into seven parts. Part I consists of crucial definitions. Parts II-III speak of issues of contract formation. The common law of contracts is significantly "modernized" in these parts. The brief Part IV speaks about title, which is mostly an obsolete concept under the Article 2. Part V addresses contract performance. Part VI is about what happens when inadequate performance is tendered. This includes the "options" you have short of suing. Part VII deals with remedies both for the buyer and seller when breach has occurred. Article 2 concludes with some significant sections, especially that on the statute of limitations (2-725).
Third, a word about history. The UCC is a product of the post-WWII world but it was not the first uniform commercial statute enacted in American history. The Uniform Sales Act ("USA") of 1906 provides the "deep background" for Article 2. Often the comments to each paragraph will begin by referring to how this section changes the wording or conception behind the USA. The Reporter for Article 2 was Karl Llewellyn of the U of Chicago Law School. Llewellyn was probably one of the most significant American Legal Realists from the 1920s-1930s. The concern of the realists was to escape what they called the "conceptualism" of CC Langdell and an earlier generation of legal scholars who seemed to want to "force" life into pre-arranged legal forms. Llewellyn's spirit pervades the whole, but it is especially evident in 1-103.
Fourth, let's look at 1-103 for a minute. It appears in Article 1, which is the general article of provisions applicable across the board, to all nine articles of the UCC. I will not quote the entire provision here; I assume you have access to the Code. But five subpoints should be pointed out. (1) "The Uniform Commercial Code must be liberally construed and applied to promote its underlying purposes..." The notion of "liberal construal" is at the heart of the UCC. It is therefore meant to be a flexible document, a document that sees itself as trying to reach to all manner of transactions. I read this section as suggesting--when in doubt, apply the UCC. (2) It is meant to "clarify" the law governing commercial transactions. Fifity jurisdictions had many different laws, leading to conflicts in the cases and uncertainty among merchants and sellers/buyers. The Code wants to clarify the law. (3) It is "pro commerce." It wants to permit "the continued expansion of commercial practices." If there is any philosophy behind Article 2 it is that trade is good for America, and rules should be adopted that facilitate rather than hinder trade. (4) It seeks to make law "uniform." In a 15-year period, in the 1950s and 1960s, Article 2 was adopted in every state except Louisiana. (5) The Code is not meant to displace existing law, especially common law principles about capacity to contract, estoppel, fraud, misrepresentation and other subjects. Thus, the Code is meant to supplement common law principles.
Though the brief exposition above does not clarify what is meant in a practical situation, such as whose statute of limitation might apply in a certain kind of transaction, it gives us the sense that the drafters of the UCC were ambitious people who saw a significant reach for the Code. Let's turn now to the basic sections of Article 2.
Copyright © 2004-2007 William R. Long