UCC Workbook

UNIFORM COMMERCIAL CODE

U.C.C.WORKBOOK

U.C.C.UNIFORMCOMMERCIALCODE

Article1.GeneralProvisions Article2.Sales Article2A.Leases Article3.NegotiableInstruments Article4.BankDeposit Article4A.FundsTransfers Article5.LettersofCredit Article6.BulkTransfersand[Revised]BulkSales Article7.WarehouseReceipts,BillsofLadingandOtherDocumentsofTitle Article8.InvestmentSecurities Article9.SecuredTransactions Copyright2005byTheAmericanLawInstituteandtheNationalConferenceofCommissionersonUniformState Laws;reproduced,publishedanddistributedforthelimitedpurposesofstudy,teaching,andacademicresearch.

U.C.C.ARTICLE1GENERALPROVISIONSPART1.GENERALPROVISIONS

1101.ShortTitles. 1102.ScopeofArticle. 1103.Constructionof[UniformCommercialCode]toPromoteitsPurposesand Policies:ApplicabilityofSupplementalPrinciplesofLaw. 1104.ConstructionAgainstImpliedRepeal. 1105.Severability. 1106.UseofSingularandPlural;Gender. 1107.SectionCaptions. 1108.RelationtoElectronicSignaturesinGlobalandNationalCommerceAct.

PART2.GENERALDEFINITIONSANDPRINCIPLESOFINTERPRETATION

1201.GeneralDefinitions. 1202.Notice;Knowledge. 1203.LeaseDistinguishedfromSecurityInterest. 1204.Value. 1205.Reasonabletime;Seasonableness. 1206.Presumptions.

PART3.TERRITORIALAPPLICABILITYANDGENERALRULES

1301.TerritorialApplicability;Parties'PowertoChooseApplicableLaw. 1302.VariationbyAgreement. 1303.CourseofPerformance,CourseofDealing,andUsageofTrade. 1304.ObligationofGoodFaith. 1305.RemediestobeLiberallyAdministered. 1306.WaiverorRenunciationofClaimorRightAfterBreach. 1307.PrimaFacieEvidencebyThirdPartyDocuments. 1308.PerformanceorAcceptanceUnderReservationofRights. 1309.OptiontoAccelerateatWill. 1310.SubordinatedObligations.

[ 3 ]

PART1.GENERALPROVISIONS 1101.ShortTitles. (a)This[Act]maybecitedastheUniformCommercialCode. (b)ThisarticlemaybecitedasUniformCommercialCodeGeneralProvisions. 1102.ScopeofArticle. Thisarticleappliestoatransactiontotheextentthatitisgovernedbyanotherarticleof [theUniformCommercialCode]. 1103.Constructionof[UniformCommercialCode]toPromoteitsPurposesand Policies:ApplicabilityofSupplementalPrinciplesofLaw. (a)[TheUniformCommercialCode]mustbeliberallyconstruedandappliedtopromote itsunderlyingpurposesandpolicies,whichare:(1)tosimplify,clarify,andmodernize thelawgoverningcommercialtransactions;(2)topermitthecontinuedexpansionof commercialpracticesthroughcustom,usage,andagreementoftheparties;and(3)to makeuniformthelawamongthevariousjurisdictions. (b)Unlessdisplacedbytheparticularprovisionsof[theUniformCommercialCode],the principlesoflawandequity,includingthelawmerchantandthelawrelativetocapacity tocontract,principalandagent,estoppel,fraud,misrepresentation,duress,coercion, mistake,bankruptcy,andothervalidatingorinvalidatingcausesupplementits provisions. 1104.ConstructionAgainstImpliedRepeal. [TheUniformCommercialCode]beingageneralactintendedasaunifiedcoverageof itssubjectmatter,nopartofitshallbedeemedtobeimpliedlyrepealedbysubsequent legislationifsuchconstructioncanreasonablybeavoided. 1105.Severability. Ifanyprovisionorclauseof[theUniformCommercialCode]oritsapplicationtoany personorcircumstanceisheldinvalid,theinvaliditydoesnotaffectotherprovisionsor applicationsof[theUniformCommercialCode]whichcanbegiveneffectwithoutthe invalidprovisionorapplication,andtothisendtheprovisionsof[theUniform CommercialCode]areseverable. 1106.UseofSingularandPlural;Gender. In[theUniformCommercialCode],unlessthestatutorycontextotherwiserequires:(1) wordsinthesingularnumberincludetheplural,andthoseinthepluralincludethe singular;and(2)wordsofanygenderalsorefertoanyothergender.[ 4 ]

1107.SectionCaptions. Sectioncaptionsarepartof[theUniformCommercialCode]. 1108.RelationtoElectronicSignaturesinGlobalandNationalCommerceAct. Thisarticlemodifies,limits,andsupersedesthefederalElectronicSignaturesinGlobal andNationalCommerceAct,15U.S.C.Section7001etseq.,exceptthatnothinginthis articlemodifies,limits,orsupersedesSection7001(c)ofthatActorauthorizes electronicdeliveryofanyofthenoticesdescribedinSection7003(b)ofthatAct. PART2.GENERALDEFINITIONSANDPRINCIPLESOFINTERPRETATION 1201.GeneralDefinitions. (a)Unlessthecontextotherwiserequires,wordsorphrasesdefinedinthissection,or intheadditionaldefinitionscontainedinotherarticlesof[theUniformCommercial Code]thatapplytoparticulararticlesorpartsthereof,havethemeaningsstated. (b)Subjecttodefinitionscontainedinotherarticlesof[theUniformCommercialCode] thatapplytoparticulararticlesorpartsthereof: (1)"Action",inthesenseofajudicialproceeding,includesrecoupment, counterclaim,setoff,suitinequity,andanyotherproceedinginwhichrightsare determined. (2)"Aggrievedparty"meansapartyentitledtopursuearemedy. (3)"Agreement",asdistinguishedfrom"contract",meansthebargainofthe partiesinfact,asfoundintheirlanguageorinferredfromothercircumstances, includingcourseofperformance,courseofdealing,orusageoftradeasprovided inSection1303. (4)"Bank"meansapersonengagedinthebusinessofbankingandincludesa savingsbank,savingsandloanassociation,creditunion,andtrustcompany. (5)"Bearer"meansapersoninpossessionofanegotiableinstrument,document oftitle,orcertificatedsecuritythatispayabletobearerorindorsedinblank. (6)"Billoflading"meansadocumentevidencingthereceiptofgoodsfor shipmentissuedbyapersonengagedinthebusinessoftransportingor forwardinggoods. (7)"Branch"includesaseparatelyincorporatedforeignbranchofabank. (8)"Burdenofestablishing"afactmeanstheburdenofpersuadingthetrierof factthattheexistenceofthefactismoreprobablethanitsnonexistence.

[ 5 ]

(9)"Buyerinordinarycourseofbusiness"meansapersonthatbuysgoodsin goodfaith,withoutknowledgethatthesaleviolatestherightsofanotherperson inthegoods,andintheordinarycoursefromaperson,otherthanapawnbroker, inthebusinessofsellinggoodsofthatkind.Apersonbuysgoodsintheordinary courseifthesaletothepersoncomportswiththeusualorcustomarypractices inthekindofbusinessinwhichthesellerisengagedorwiththeseller'sown usualorcustomarypractices.Apersonthatsellsoil,gas,orothermineralsatthe wellheadormineheadisapersoninthebusinessofsellinggoodsofthatkind.A buyerinordinarycourseofbusinessmaybuyforcash,byexchangeofother property,oronsecuredorunsecuredcredit,andmayacquiregoodsor documentsoftitleunderapreexistingcontractforsale.Onlyabuyerthattakes possessionofthegoodsorhasarighttorecoverthegoodsfromthesellerunder Article2maybeabuyerinordinarycourseofbusiness."Buyerinordinary courseofbusiness"doesnotincludeapersonthatacquiresgoodsinatransferin bulkorassecurityfororintotalorpartialsatisfactionofamoneydebt. (10)"Conspicuous",withreferencetoaterm,meanssowritten,displayed,or presentedthatareasonablepersonagainstwhichitistooperateoughttohave noticedit.Whetheratermis"conspicuous"ornotisadecisionforthecourt. Conspicuoustermsincludethefollowing:(A)aheadingincapitalsequaltoor greaterinsizethanthesurroundingtext,orincontrastingtype,font,orcolorto thesurroundingtextofthesameorlessersize;and(B)languageinthebodyofa recordordisplayinlargertypethanthesurroundingtext,orincontrastingtype, font,orcolortothesurroundingtextofthesamesize,orsetofffrom surroundingtextofthesamesizebysymbolsorothermarksthatcallattention tothelanguage. (11)"Consumer"meansanindividualwhoentersintoatransactionprimarily forpersonal,family,orhouseholdpurposes. (12)"Contract",asdistinguishedfrom"agreement",meansthetotallegal obligationthatresultsfromtheparties'agreementasdeterminedby[the UniformCommercialCode]assupplementedbyanyotherapplicablelaws. (13)"Creditor"includesageneralcreditor,asecuredcreditor,aliencreditor, andanyrepresentativeofcreditors,includinganassigneeforthebenefitof creditors,atrusteeinbankruptcy,areceiverinequity,andanexecutoror administratorofaninsolventdebtor'sorassignor'sestate. (14)"Defendant"includesapersoninthepositionofdefendantina counterclaim,crossclaim,orthirdpartyclaim. (15)"Delivery",withrespecttoaninstrument,documentoftitle,orchattel paper,meansvoluntarytransferofpossession. (16)"Documentoftitle"includesbilloflading,dockwarrant,dockreceipt, warehousereceiptororderforthedeliveryofgoods,andalsoanyother documentwhichintheregularcourseofbusinessorfinancingistreatedas adequatelyevidencingthatthepersoninpossessionofitisentitledtoreceive,[ 6 ]

hold,anddisposeofthedocumentandthegoodsitcovers.Tobeadocumentof title,adocumentmustpurporttobeissuedbyoraddressedtoabaileeand purporttocovergoodsinthebailee'spossessionwhichareeitheridentifiedor arefungibleportionsofanidentifiedmass. (17)"Fault"meansadefault,breach,orwrongfulactoromission. (18)"Fungiblegoods"means:(A)goodsofwhichanyunit,bynatureorusageof trade,istheequivalentofanyotherlikeunit;or(B)goodsthatbyagreementare treatedasequivalent. (19)"Genuine"meansfreeofforgeryorcounterfeiting. (20)"Goodfaith,"exceptasotherwiseprovidedinArticle5,meanshonestyin factandtheobservanceofreasonablecommercialstandardsoffairdealing. (21)"Holder"means:(A)thepersoninpossessionofanegotiableinstrument thatispayableeithertobearerortoanidentifiedpersonthatisthepersonin possession;or(B)thepersoninpossessionofadocumentoftitleifthegoodsare deliverableeithertobearerortotheorderofthepersoninpossession. (22)"Insolvencyproceeding"includesanassignmentforthebenefitofcreditors orotherproceedingintendedtoliquidateorrehabilitatetheestateoftheperson involved. (23)"Insolvent"means:(A)havinggenerallyceasedtopaydebtsintheordinary courseofbusinessotherthanasaresultofbonafidedispute;(B)beingunableto paydebtsastheybecomedue;or(C)beinginsolventwithinthemeaningof federalbankruptcylaw. (24)"Money"meansamediumofexchangecurrentlyauthorizedoradoptedbya domesticorforeigngovernment.Thetermincludesamonetaryunitofaccount establishedbyanintergovernmentalorganizationorbyagreementbetweentwo ormorecountries. (25)"Organization"meansapersonotherthananindividual. (26)"Party",asdistinguishedfrom"thirdparty",meansapersonthathas engagedinatransactionormadeanagreementsubjectto[theUniform CommercialCode]. (27)"Person"meansanindividual,corporation,businesstrust,estate,trust, partnership,limitedliabilitycompany,association,jointventure,government, governmentalsubdivision,agency,orinstrumentality,publiccorporation,orany otherlegalorcommercialentity. (28)"Presentvalue"meanstheamountasofadatecertainofoneormoresums payableinthefuture,discountedtothedatecertainbyuseofeitheraninterest ratespecifiedbythepartiesifthatrateisnotmanifestlyunreasonableatthe[ 7 ]

timethetransactionisenteredintoor,ifaninterestrateisnotsospecified,a commerciallyreasonableratethattakesintoaccountthefactsand circumstancesatthetimethetransactionisenteredinto. (29)"Purchase"meanstakingbysale,lease,discount,negotiation,mortgage, pledge,lien,securityinterest,issueorreissue,gift,oranyothervoluntary transactioncreatinganinterestinproperty. (30)"Purchaser"meansapersonthattakesbypurchase. (31)"Record"meansinformationthatisinscribedonatangiblemediumorthat isstoredinanelectronicorothermediumandisretrievableinperceivableform. (32)"Remedy"meansanyremedialrighttowhichanaggrievedpartyisentitled withorwithoutresorttoatribunal. (33)"Representative"meansapersonempoweredtoactforanother,including anagent,anofficerofacorporationorassociation,andatrustee,executor,or administratorofanestate. (34)"Right"includesremedy. (35)"Securityinterest"meansaninterestinpersonalpropertyorfixtureswhich securespaymentorperformanceofanobligation."Securityinterest"includes anyinterestofaconsignorandabuyerofaccounts,chattelpaper,apayment intangible,orapromissorynoteinatransactionthatissubjecttoArticle9. "Securityinterest"doesnotincludethespecialpropertyinterestofabuyerof goodsonidentificationofthosegoodstoacontractforsaleunderSection2505, therightofasellerorlessorofgoodsunderArticle2or2Atoretainoracquire possessionofthegoodsisnota"securityinterest",butasellerorlessormayalso acquirea"securityinterest"bycomplyingwithArticle9.Theretentionor reservationoftitlebyasellerofgoodsnotwithstandingshipmentordeliveryto thebuyerunderSection2401islimitedineffecttoareservationofa"security interest."Whetheratransactionintheformofaleasecreatesa"security interest"isdeterminedpursuanttoSection1203. (36)"Send"inconnectionwithawriting,record,ornoticemeans:(A)todeposit inthemailordeliverfortransmissionbyanyotherusualmeansof communicationwithpostageorcostoftransmissionprovidedforandproperly addressedand,inthecaseofaninstrument,toanaddressspecifiedthereonor otherwiseagreed,oriftherebenonetoanyaddressreasonableunderthe circumstances;or(B)inanyotherwaytocausetobereceivedanyrecordor noticewithinthetimeitwouldhavearrivedifproperlysent. (37)"Signed"includesusinganysymbolexecutedoradoptedwithpresent intentiontoadoptoracceptawriting.

[ 8 ]

(38)"State"meansaStateoftheUnitedStates,theDistrictofColumbia,Puerto Rico,theUnitedStatesVirginIslands,oranyterritoryorinsularpossession subjecttothejurisdictionoftheUnitedStates. (39)"Surety"includesaguarantororothersecondaryobligor. (40)"Term"meansaportionofanagreementthatrelatestoaparticularmatter. (41)"Unauthorizedsignature"meansasignaturemadewithoutactual,implied, orapparentauthority.Thetermincludesaforgery. (42)"Warehousereceipt"meansareceiptissuedbyapersonengagedinthe businessofstoringgoodsforhire. (43)"Writing"includesprinting,typewriting,oranyotherintentionalreduction totangibleform."Written"hasacorrespondingmeaning. 1202.Notice;Knowledge. (a)Subjecttosubsection(f),apersonhas"notice"ofafactiftheperson:(1)hasactual knowledgeofit;(2)hasreceivedanoticeornotificationofit;or(3)fromallthefacts andcircumstancesknowntothepersonatthetimeinquestion,hasreasontoknowthat itexists. (b)"Knowledge"meansactualknowledge."Knows"hasacorrespondingmeaning. (c)"Discover","learn",orwordsofsimilarimportrefertoknowledgeratherthanto reasontoknow. (d)Aperson"notifies"or"gives"anoticeornotificationtoanotherpersonbytaking suchstepsasmaybereasonablyrequiredtoinformtheotherpersoninordinary course,whetherornottheotherpersonactuallycomestoknowofit. (e)Subjecttosubsection(f),aperson"receives"anoticeornotificationwhen:(1)it comestothatperson'sattention;or(2)itisdulydeliveredinaformreasonableunder thecircumstancesattheplaceofbusinessthroughwhichthecontractwasmadeorat anotherlocationheldoutbythatpersonastheplaceforreceiptofsuch communications. (f)Notice,knowledge,oranoticeornotificationreceivedbyanorganizationiseffective foraparticulartransactionfromthetimeitisbroughttotheattentionoftheindividual conductingthattransactionand,inanyevent,fromthetimeitwouldhavebeenbrought totheindividual'sattentioniftheorganizationhadexercisedduediligence.An organizationexercisesduediligenceifitmaintainsreasonableroutinesfor communicatingsignificantinformationtothepersonconductingthetransactionand thereisreasonablecompliancewiththeroutines.Duediligencedoesnotrequirean individualactingfortheorganizationtocommunicateinformationunlessthe communicationispartoftheindividual'sregulardutiesortheindividualhasreasonto[ 9 ]

knowofthetransactionandthatthetransactionwouldbemateriallyaffectedbythe information. 1203.LeaseDistinguishedfromSecurityInterest. (a)Whetheratransactionintheformofaleasecreatesaleaseorsecurityinterestis determinedbythefactsofeachcase. (b)Atransactionintheformofaleasecreatesasecurityinterestiftheconsideration thatthelesseeistopaythelessorfortherighttopossessionanduseofthegoodsisan obligationforthetermoftheleaseandisnotsubjecttoterminationbythelessee,and: (1)theoriginaltermoftheleaseisequaltoorgreaterthantheremainingeconomiclife ofthegoods;(2)thelesseeisboundtorenewtheleasefortheremainingeconomiclife ofthegoodsorisboundtobecometheownerofthegoods;(3)thelesseehasanoption torenewtheleasefortheremainingeconomiclifeofthegoodsfornoadditional considerationorfornominaladditionalconsiderationuponcompliancewiththelease agreement;or(4)thelesseehasanoptiontobecometheownerofthegoodsforno additionalconsiderationorfornominaladditionalconsiderationuponcompliancewith theleaseagreement. (c)Atransactionintheformofaleasedoesnotcreateasecurityinterestmerely because:(1)thepresentvalueoftheconsiderationthelesseeisobligatedtopaythe lessorfortherighttopossessionanduseofthegoodsissubstantiallyequaltooris greaterthanthefairmarketvalueofthegoodsatthetimetheleaseisenteredinto;(2) thelesseeassumesriskoflossofthegoods;(3)thelesseeagreestopay,withrespectto thegoods,taxes,insurance,filing,recording,orregistrationfees,orserviceor maintenancecosts;(4)thelesseehasanoptiontorenewtheleaseortobecomethe ownerofthegoods;(5)thelesseehasanoptiontorenewtheleaseforafixedrentthat isequaltoorgreaterthanthereasonablypredictablefairmarketrentfortheuseofthe goodsforthetermoftherenewalatthetimetheoptionistobeperformed;or(6)the lesseehasanoptiontobecometheownerofthegoodsforafixedpricethatisequalto orgreaterthanthereasonablypredictablefairmarketvalueofthegoodsatthetimethe optionistobeperformed. (d)Additionalconsiderationisnominalifitislessthanthelessee'sreasonably predictablecostofperformingundertheleaseagreementiftheoptionisnotexercised. Additionalconsiderationisnotnominalif:(1)whentheoptiontorenewtheleaseis grantedtothelessee,therentisstatedtobethefairmarketrentfortheuseofthe goodsforthetermoftherenewaldeterminedatthetimetheoptionistobeperformed; or(2)whentheoptiontobecometheownerofthegoodsisgrantedtothelessee,the priceisstatedtobethefairmarketvalueofthegoodsdeterminedatthetimetheoption istobeperformed. (e)The"remainingeconomiclifeofthegoods"and"reasonablypredictable"fairmarket rent,fairmarketvalue,orcostofperformingundertheleaseagreementmustbe determinedwithreferencetothefactsandcircumstancesatthetimethetransactionis enteredinto. [ 10 ]

1204.Value. ExceptasotherwiseprovidedinArticles3,4,[and]5,[and6],apersongivesvaluefor rightsifthepersonacquiresthem:(1)inreturnforabindingcommitmenttoextend creditorfortheextensionofimmediatelyavailablecredit,whetherornotdrawnupon andwhetherornotachargebackisprovidedforintheeventofdifficultiesin collection;(2)assecurityfor,orintotalorpartialsatisfactionof,apreexistingclaim;(3) byacceptingdeliveryunderapreexistingcontractforpurchase;or(4)inreturnforany considerationsufficienttosupportasimplecontract. 1205.Reasonabletime;Seasonableness. (a)Whetheratimefortakinganactionrequiredby[theUniformCommercialCode]is reasonabledependsonthenature,purpose,andcircumstancesoftheaction. (b)Anactionistakenseasonablyifitistakenatorwithinthetimeagreedor,ifnotime isagreed,atorwithinareasonabletime. 1206.Presumptions. Whenever[theUniformCommercialCode]createsa"presumption"withrespecttoa fact,orprovidesthatafactis"presumed,"thetrieroffactmustfindtheexistenceofthe factunlessanduntilevidenceisintroducedthatsupportsafindingofitsnonexistence. PART3.TERRITORIALAPPLICABILITYANDGENERALRULES 1301.TerritorialApplicability;Parties'PowertoChooseApplicableLaw. (a)Inthissection: (1)"Domestictransaction"meansatransactionotherthananinternational transaction. (2)"Internationaltransaction"meansatransactionthatbearsareasonable relationtoacountryotherthantheUnitedStates. (b)Thissectionappliestoatransactiontotheextentthatitisgovernedbyanother articleofthe[UniformCommercialCode]. (c)Exceptasotherwiseprovidedinthissection: (1)anagreementbypartiestoadomestictransactionthatanyoralloftheir rightsandobligationsaretobedeterminedbythelawofthisStateorofanother Stateiseffective,whetherornotthetransactionbearsarelationtotheState designated;and (2)anagreementbypartiestoaninternationaltransactionthatanyorallof theirrightsandobligationsaretobedeterminedbythelawofthisStateorof[ 11 ]

anotherStateorcountryiseffective,whetherornotthetransactionbearsa relationtotheStateorcountrydesignated. (d)Intheabsenceofanagreementeffectiveundersubsection(c),andexceptas providedinsubsections(e)and(g),therightsandobligationsofthepartiesare determinedbythelawthatwouldbeselectedbyapplicationofthisState'sconflictof lawsprinciples. (e)Ifoneofthepartiestoatransactionisaconsumer,thefollowingrulesapply: (1)Anagreementreferredtoinsubsection(c)isnoteffectiveunlessthe transactionbearsareasonablerelationtotheStateorcountrydesignated. (2)ApplicationofthelawoftheStateorcountrydeterminedpursuantto subsection(c)or(d)maynotdeprivetheconsumeroftheprotectionofanyrule oflawgoverningamatterwithinthescopeofthissection,whichbothis protectiveofconsumersandmaynotbevariedbyagreement:(A)oftheStateor countryinwhichtheconsumerprincipallyresides,unlesssubparagraph(B) applies;or(B)ifthetransactionisasaleofgoods,oftheStateorcountryin whichtheconsumerbothmakesthecontractandtakesdeliveryofthosegoods, ifsuchStateorcountryisnottheStateorcountryinwhichtheconsumer principallyresides. (f)Anagreementotherwiseeffectiveundersubsection(c)isnoteffectivetotheextent thatapplicationofthelawoftheStateorcountrydesignatedwouldbecontrarytoa fundamentalpolicyoftheStateorcountrywhoselawwouldgovernintheabsenceof agreementundersubsection(d). (g)Totheextentthat[theUniformCommercialCode]governsatransaction,ifoneof thefollowingprovisionsof[theUniformCommercialCode]specifiestheapplicablelaw, thatprovisiongovernsandacontraryagreementiseffectiveonlytotheextent permittedbythelawsospecified:(1)Section2402;(2)Sections2A105and2A106; (3)Section4102;(4)Section4A507;(5)Section5116;[(6)Section6103;](7) Section8110;(8)Sections9301through9307. 1302.VariationbyAgreement. (a)Exceptasotherwiseprovidedinsubsection(b)orelsewherein[theUniform CommercialCode],theeffectofprovisionsof[theUniformCommercialCode]maybe variedbyagreement. (b)Theobligationsofgoodfaith,diligence,reasonableness,andcareprescribedby[the UniformCommercialCode]maynotbedisclaimedbyagreement.Theparties,by agreement,maydeterminethestandardsbywhichtheperformanceofthose obligationsistobemeasuredifthosestandardsarenotmanifestlyunreasonable. Whenever[theUniformCommercialCode]requiresanactiontobetakenwithina reasonabletime,atimethatisnotmanifestlyunreasonablemaybefixedbyagreement.

[ 12 ]

(c)Thepresenceincertainprovisionsof[theUniformCommercialCode]ofthephrase "unlessotherwiseagreed",orwordsofsimilarimport,doesnotimplythattheeffectof otherprovisionsmaynotbevariedbyagreementunderthissection. 1303.CourseofPerformance,CourseofDealing,andUsageofTrade. (a)A"courseofperformance"isasequenceofconductbetweenthepartiestoa particulartransactionthatexistsif:(1)theagreementofthepartieswithrespecttothe transactioninvolvesrepeatedoccasionsforperformancebyaparty;and(2)theother party,withknowledgeofthenatureoftheperformanceandopportunityforobjection toit,acceptstheperformanceoracquiescesinitwithoutobjection. (b)A"courseofdealing"isasequenceofconductconcerningprevioustransactions betweenthepartiestoaparticulartransactionthatisfairlytoberegardedas establishingacommonbasisofunderstandingforinterpretingtheirexpressionsand otherconduct. (c)A"usageoftrade"isanypracticeormethodofdealinghavingsuchregularityof observanceinaplace,vocation,ortradeastojustifyanexpectationthatitwillbe observedwithrespecttothetransactioninquestion.Theexistenceandscopeofsucha usagemustbeprovedasfacts.Ifitisestablishedthatsuchausageisembodiedina tradecodeorsimilarrecord,theinterpretationoftherecordisaquestionoflaw. (d)Acourseofperformanceorcourseofdealingbetweenthepartiesorusageoftrade inthevocationortradeinwhichtheyareengagedorofwhichtheyareorshouldbe awareisrelevantinascertainingthemeaningoftheparties'agreement,maygive particularmeaningtospecifictermsoftheagreement,andmaysupplementorqualify thetermsoftheagreement.Ausageoftradeapplicableintheplaceinwhichpartofthe performanceundertheagreementistooccurmaybesoutilizedastothatpartofthe performance. (e)Exceptasotherwiseprovidedinsubsection(f),theexpresstermsofanagreement andanyapplicablecourseofperformance,courseofdealing,orusageoftrademustbe construedwheneverreasonableasconsistentwitheachother.Ifsuchaconstructionis unreasonable:(1)expresstermsprevailovercourseofperformance,courseofdealing, andusageoftrade;(2)courseofperformanceprevailsovercourseofdealingandusage oftrade;and(3)courseofdealingprevailsoverusageoftrade. (f)SubjecttoSection2209,acourseofperformanceisrelevanttoshowawaiveror modificationofanyterminconsistentwiththecourseofperformance. (g)Evidenceofarelevantusageoftradeofferedbyonepartyisnotadmissibleunless thatpartyhasgiventheotherpartynoticethatthecourtfindssufficienttoprevent unfairsurprisetotheotherparty. 1304.ObligationofGoodFaith. Everycontractordutywithin[theUniformCommercialCode]imposesanobligationof goodfaithinitsperformanceandenforcement.[ 13 ]

1305.RemediestobeLiberallyAdministered. (a)Theremediesprovidedby[theUniformCommercialCode]mustbeliberally administeredtotheendthattheaggrievedpartymaybeputinasgoodapositionasif theotherpartyhadfullyperformedbutneitherconsequentialorspecialdamagesnor penaldamagesmaybehadexceptasspecificallyprovidedin[theUniformCommercial Code]orbyotherruleoflaw. (b)Anyrightorobligationdeclaredby[theUniformCommercialCode]isenforceable byactionunlesstheprovisiondeclaringitspecifiesadifferentandlimitedeffect. 1306.WaiverorRenunciationofClaimorRightAfterBreach. Aclaimorrightarisingoutofanallegedbreachmaybedischargedinwholeorinpart withoutconsiderationbyagreementoftheaggrievedpartyinanauthenticatedrecord. 1307.PrimaFacieEvidencebyThirdPartyDocuments. Adocumentindueformpurportingtobeabilloflading,policyorcertificateof insurance,officialweigher'sorinspector'scertificate,consularinvoice,oranyother documentauthorizedorrequiredbythecontracttobeissuedbyathirdpartyisprima facieevidenceofitsownauthenticityandgenuinenessandofthefactsstatedinthe documentbythethirdparty. 1308.PerformanceorAcceptanceUnderReservationofRights. (a)Apartythatwithexplicitreservationofrightsperformsorpromisesperformanceor assentstoperformanceinamannerdemandedorofferedbytheotherpartydoesnot therebyprejudicetherightsreserved.Suchwordsas"withoutprejudice,""under protest,"orthelikearesufficient. (b)Subsection(a)doesnotapplytoanaccordandsatisfaction. 1309.OptiontoAccelerateatWill. Atermprovidingthatonepartyorthatparty'ssuccessorininterestmayaccelerate paymentorperformanceorrequirecollateraloradditionalcollateral"atwill"orwhen theparty"deemsitselfinsecure,"orwordsofsimilarimport,meansthatthepartyhas powertodosoonlyifthatpartyingoodfaithbelievesthattheprospectofpaymentor performanceisimpaired.Theburdenofestablishinglackofgoodfaithisontheparty againstwhichthepowerhasbeenexercised. 1310.SubordinatedObligations. Anobligationmaybeissuedassubordinatedtoperformanceofanotherobligationof thepersonobligated,oracreditormaysubordinateitsrighttoperformanceofan obligationbyagreementwitheitherthepersonobligatedoranothercreditorofthe personobligated.Subordinationdoesnotcreateasecurityinterestasagainsteitherthe commondebtororasubordinatedcreditor.[ 14 ]

M.I.C.NOTES[UCCARTICLE1:GENERALPROVISIONS] __________________________________________________________________________________________________________________________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________[ 15 ]










U.C.C.ARTICLE2SALESPART1.SHORTTITLE,GENERALCONSTRUCTIONANDSUBJECTMATTER

2101.ShortTitle. 2102.Scope;CertainSecurityandOtherTransactionsExcludedFromThisArticle. 2103.DefinitionsandIndexofDefinitions. 2104.Definitions:"Merchant";"BetweenMerchants";"FinancingAgency". 2105.Definitions:Transferability;"Goods";"Future"Goods;"Lot";"Commercial Unit". 2106.Definitions:"Contract";"Agreement";"Contractforsale";"Sale";"Presentsale"; "Conforming"toContract;"Termination";"Cancellation". 2107.GoodstoBeSeveredFromRealty:Recording.

PART2.FORM,FORMATIONANDREADJUSTMENTOFCONTRACT

2201.FormalRequirements;StatuteofFrauds. 2202.FinalWrittenExpression:ParolorExtrinsicEvidence. 2203.SealsInoperative. 2204.FormationinGeneral. 2205.FirmOffers. 2206.OfferandAcceptanceinFormationofContract. 2207.AdditionalTermsinAcceptanceorConfirmation. 2209.Modification,RescissionandWaiver. 2210.DelegationofPerformance;AssignmentofRights.

PART3.GENERALOBLIGATIONANDCONSTRUCTIONOFCONTRACT

2301.GeneralObligationsofParties. 2302.UnconscionablecontractorClause. 2303.AllocationorDivisionofRisks. 2304.PricePayableinMoney,Goods,Realty,orOtherwise. 2305.OpenPriceTerm. 2306.Output,RequirementsandExclusiveDealings. 2307.DeliveryinSingleLotorSeveralLots. 2308.AbsenceofSpecifiedPlaceforDelivery. 2309.AbsenceofSpecificTimeProvisions;NoticeofTermination. 2310.OpenTimeforPaymentorRunningofCredit;AuthoritytoShipUnder Reservation. 2311.OptionsandCooperationRespectingPerformance. 2312.WarrantyofTitleandAgainstInfringement;Buyer'sObligationAgainst Infringement. 2313.ExpressWarrantiesbyAffirmation,Promise,Description,Sample. 2313A.ObligationtoRemotePurchaserCreatedbyRecordPackagedWithor AccompanyingGoods 2313B.ObligationtoRemotePurchaserCreatedbyCommunicationtothePublic 2314.ImpliedWarranty:Merchantability;UsageofTrade.[ 25 ]

2315.ImpliedWarranty:FitnessforParticularPurpose. 2316.ExclusionorModificationofWarranties. 2317.CumulationandConflictofWarrantiesExpressorImplied. 2318.ThirdPartyBeneficiariesofWarrantiesExpressorImplied. 2319.F.O.B.andF.A.S.Terms. 2320.C.I.F.andC.&F.Terms. 2321.C.I.F.orC.&F.:"NetLandedWeights";"PaymentonArrival";Warrantyof ConditiononArrival. 2322.Delivery"ExShip". 2323.FormofBillofLadingRequiredinOverseasShipment;"Overseas". 2324."NoArrival,Nosale"Term. 2325."LetterofCredit"Term;"ConfirmedCredit". 2326.SaleonApprovalandSaleorReturn;ConsignmentSalesandRightsof Creditors. 2327.SpecialIncidentsofSaleonApprovalandSaleorReturn. 2328.SalebyAuction.

PART4.TITLE,CREDITORSANDGOODFAITHPURCHASERS

2401.PassingofTitle;ReservationforSecurity;LimitedApplicationofThisSection. 2402.RightsofSeller'sCreditorsAgainstSoldGoods. 2403.PowertoTransfer;GoodFaithPurchaseofGoods;"Entrusting".

PART5.PERFORMANCE

2501.InsurableInterestinGoods;MannerofIdentificationofGoods. 2502.Buyer'sRighttoGoodsonSeller'sRepudiation,FailuretoDeliveror Insolvency. 2503.MannerofSeller'sTenderofDelivery. 2504.ShipmentbySeller. 2505.Seller'sShipmentUnderReservation. 2506.RightsofFinancingagency. 2507.EffectofSeller'sTender;DeliveryonCondition. 2508.CurebySellerofImproperTenderorDelivery;Replacement. 2509.RiskofLossintheAbsenceofBreach. 2510.EffectofBreachonRiskofLoss. 2511.TenderofPaymentbyBuyer;PaymentbyCheck. 2512.PaymentbyBuyerBeforeInspection. 2513.Buyer'sRighttoInspectionofGoods. 2514.WhenDocumentsDeliverableonAcceptance;WhenonPayment. 2515.PreservingEvidenceofGoodsinDispute.

PART6.BREACH,REPUDIATIONANDEXCUSE

2601.Buyer'sRightsonImproperDelivery. 2602.MannerandEffectofRightfulRejection. 2603.MerchantBuyer'sDutiesastoRightfullyRejectedGoods. 2604.Buyer'sOptionsastoSalvageofRightfullyRejectedGoods. 2605.WaiverofBuyer'sObjectionsbyFailuretoParticularize.[ 26 ]

2606.WhatConstitutesAcceptanceofGoods. 2607.EffectofAcceptance;NoticeofBreach;BurdenofEstablishingBreachAfter Acceptance;NoticeofClaimorLitigationtoPersonAnswerableOver. 2608.RevocationofAcceptanceinWholeorinPart. 2609.RighttoAdequateAssuranceofPerformance. 2610.AnticipatoryRepudiation. 2611.RetractionofAnticipatoryRepudiation. 2612."Installmentcontract";Breach. 2613.CasualtytoIdentifiedGoods. 2614.SubstitutedPerformance. 2615.ExcusebyFailureofPresupposedConditions. 2616.ProcedureonNoticeClaimingExcuse.

PART7.REMEDIES

2701.RemediesforBreachofCollateralcontractsNotImpaired. 2702.Seller'sRemediesonDiscoveryofBuyer'sInsolvency. 2703.Seller'sRemediesinGeneral. 2704.Seller'sRighttoIdentifyGoodstotheContractNotwithstandingBreachorto SalvageUnfinishedGoods. 2705.Seller'sStoppageofDeliveryinTransitorOtherwise. 2706.Seller'sResaleIncludingContractforResale. 2707."PersoninthePositionofaSeller". 2708.Seller'sDamagesforNonacceptanceorRepudiation. 2709.ActionforthePrice. 2710.Seller'sIncidentalDamages. 2711.Buyer'sRemediesinGeneral;Buyer'sSecurityInterestinRejectedGoods. 2712."Cover";Buyer'sProcurementofSubstituteGoods. 2713.Buyer'sDamagesforNondeliveryorRepudiation. 2714.Buyer'sDamagesforBreachinRegardtoAcceptedGoods. 2715.Buyer'sIncidentalandConsequentialDamages. 2716.Buyer'sRighttoSpecificPerformanceorReplevin. 2717.DeductionofDamagesFromthePrice. 2718.LiquidationorLimitationofDamages;Deposits. 2719.ContractualModificationorLimitationofRemedy. 2720.Effectof"Cancellation"or"Rescission"onClaimsforAntecedentBreach. 2721.RemediesforFraud. 2722.WhoCanSueThirdPartiesforInjurytoGoods. 2723.ProofofMarketPrice:TimeandPlace. 2724.AdmissibilityofMarketQuotations. 2725.StatuteofLimitationsinContractsforSale.

[ 27 ]

PART1.SHORTTITLE,GENERALCONSTRUCTIONANDSUBJECTMATTER 2101.ShortTitle. ThisArticleshallbeknownandmaybecitedasUniformCommercialCodeSales. 2102.Scope;CertainSecurityandOtherTransactionsExcludedFromThisArticle. Unlessthecontextotherwiserequires,thisArticleappliestotransactionsingoods;it doesnotapplytoanytransactionwhichalthoughintheformofanunconditional contracttosellorpresentsaleisintendedtooperateonlyasasecuritytransactionnor doesthisArticleimpairorrepealanystatuteregulatingsalestoconsumers,farmersor otherspecifiedclassesofbuyers. 2103.DefinitionsandIndexofDefinitions. (1)InthisArticleunlessthecontextotherwiserequires (a)"Buyer"meansapersonthatbuysorcontractstobuygoods. (b)"Conspicuous",withreferencetoaterm,meanssowritten,displayed,or presentedthatareasonablepersonagainstwhichitistooperateoughttohave noticedit.Aterminanelectronicrecordintendedtoevokearesponsebyan electronicagentisconspicuousifitispresentedinaformthatwouldenablea reasonablyconfiguredelectronicagenttotakeitintoaccountorreacttoit withoutreviewoftherecordbyanindividual.Whetheratermis"conspicuous" ornotisadecisionforthecourt.Conspicuoustermsincludethefollowing: (i)foraperson: (A)aheadingincapitalsequaltoorgreaterinsizethanthe surroundingtext,orincontrastingtype,font,orcolortothe surroundingtextofthesameorlessersize;and (B)languageinthebodyofarecordordisplayinlargertypethan thesurroundingtext,orincontrastingtype,font,orcolortothe surroundingtextofthesamesize,orsetofffromsurroundingtext ofthesamesizebysymbolsorothermarksthatcallattentionto thelanguage;and (ii)forapersonoranelectronicagent,atermthatissoplacedinarecord ordisplaythatthepersonorelectronicagentmaynotproceedwithout takingactionwithrespecttotheparticularterm. (c)"Consumer"meansanindividualwhobuysorcontractstobuygoodsthat,at thetimeofcontracting,areintendedbytheindividualtobeusedprimarilyfor personal,family,orhouseholdpurposes.

[ 28 ]

(d)"Consumercontract"meansacontractbetweenamerchantselleranda consumer. (e)"Delivery"meansthevoluntarytransferofphysicalpossessionorcontrolof goods. (f)"Electronic"meansrelatingtotechnologyhavingelectrical,digital,magnetic, wireless,optical,electromagnetic,orsimilarcapabilities. (g)"Electronicagent"meansacomputerprogramoranelectronicorother automatedmeansusedindependentlytoinitiateanactionorrespondto electronicrecordsorperformancesinwholeorinpart,withoutrevieworaction byanindividual. (h)"Electronicrecord"meansarecordcreated,generated,sent,communicated, received,orstoredbyelectronicmeans. (i)"Foreignexchangetransaction"meansatransactioninwhichoneparty agreestodeliveraquantityofaspecifiedmoneyorunitofaccountin considerationoftheotherparty'sagreementtodeliveranotherquantityofa differentmoneyorunitofaccounteithercurrentlyoratafuturedate,andin whichdeliveryistobethroughfundstransfer,bookentryaccounting,orother formofpaymentorder,orotheragreedmeanstotransferacreditbalance.The termincludesatransactionofthistypeinvolvingtwoormoremoneysandspot, forward,option,orotherproductsderivedfromunderlyingmoneysandany combinationofthesetransactions.Thetermdoesnotincludeatransaction involvingtwoormoremoneysinwhichoneorbothofthepartiesisobligatedto makephysicaldelivery,atthetimeofcontractingorinthefuture,ofbanknotes, coins,orotherformoflegaltenderorspecie. [(j)Reserved] [(j)"Goodfaith"meanshonestyinfactandtheobservanceofreasonable commercialstandardsoffairdealing.] LegislativeNote:Thedefinitionof"goodfaith"shouldnotbeadoptedifthe jurisdictionhasenactedthisdefinitionaspartofArticle1. (k)"Goods"meansallthingsthataremovableatthetimeofidentificationtoa contractforsale.Thetermincludesfuturegoods,speciallymanufacturedgoods, theunbornyoungofanimals,growingcrops,andotheridentifiedthingsattached torealtyasdescribedinSection2107.Thetermdoesnotincludeinformation, themoneyinwhichthepriceistobepaid,investmentsecuritiesunderArticle8, thesubjectmatterofforeignexchangetransactions,orchosesinaction. (l)"Receiptofgoods"meanstakingphysicalpossessionofgoods. (m)"Record"meansinformationthatisinscribedonatangiblemediumorthat isstoredinanelectronicorothermediumandisretrievableinperceivableform.[ 29 ]

LegislativeNote:Thedefinitionof"record"shouldnotbeadoptedifthe jurisdictionhasenactedrevisedArticle1. (n)"Remedialpromise"meansapromisebythesellertorepairorreplacegoods ortorefundallorpartofthepriceofgoodsuponthehappeningofaspecified event. (o)"Seller"meansapersonthatsellsorcontractstosellgoods. (p)"Sign"means,withpresentintenttoauthenticateoradoptarecord: (i)toexecuteoradoptatangiblesymbol;or (ii)toattachtoorlogicallyassociatewiththerecordanelectronicsound, symbol,orprocess. (2)OtherdefinitionsapplyingtothisArticleortospecifiedPartsthereof,andthe sectionsinwhichtheyappearare: "Acceptance".Section2606. "Betweenmerchants".Section2104. "Cancellation".Section2106(4). "Commercialunit".Section2105. "Conformingtocontract".Section2106. "Contractforsale".Section2106. "Cover".Section2712. "Entrusting".Section2403. "Financingagency".Section2104. "FutureGoods".Section2105. "Goods".Section2103. "Identification".Section2501. "Installmentcontract".Section2612. "Lot".Section2105. "Merchant".Section2104.[ 30 ]

"PersoninpositionofSeller".Section2707. "Presentsale".Section2106. "Sale".Section2106. "Saleonapproval".Section2326. "Saleorreturn".Section2326. "Termination".Section2106. (3)"Control"asprovidedinSection7106andthefollowingdefinitionsinother ArticlesapplytothisArticle: "Check".Section3104(f). "Consignee".Section7102(3). "Consignor".Section7102(4). "ConsumerGoods".Section9102(a)(23). "Dishonor".Section3502. "Draft".Section3104(e). "Honor".Section5102(a)(8). "Injunctionagainsthonor".Section5109(b). "Letterofcredit".Section5102(a)(10). (4)InadditionArticle1containsgeneraldefinitionsandprinciplesofconstructionand interpretationapplicablethroughoutthisArticle. 2104.Definitions:"Merchant";"BetweenMerchants";"FinancingAgency". (1)"Merchant"meansapersonthatdealsingoodsofthekindorotherwiseholdsitself outbyoccupationashavingknowledgeorskillpeculiartothepracticesorgoods involvedinthetransactionortowhichtheknowledgeorskillmaybeattributedbythe person'semploymentofanagentorbrokerorotherintermediarythatholdsitselfout byoccupationashavingtheknowledgeorskill. (2)"Financingagency"meansabank,financecompanyorotherpersonthatinthe ordinarycourseofbusinessmakesadvancesagainstgoodsordocumentsoftitleorthat byarrangementwitheitherthesellerorthebuyerintervenesinordinarycourseto makeorcollectpaymentdueorclaimedunderthecontractforsale,asbypurchasingor payingtheseller'sdraftormakingadvancesagainstitorbymerelytakingitfor[ 31 ]

collectionwhetherornotdocumentsoftitleaccompanyorareassociatedwiththe draft.Thetermincludesalsoabankorotherpersonthatsimilarlyintervenesbetween personsthatareinthepositionofsellerandbuyerinrespecttothegoods(Section2 707). (3)"BetweenMerchants"meansinanytransactionwithrespecttowhichbothparties arechargeablewiththeknowledgeorskillofmerchants. 2105.Definitions:Transferability;"Future"Goods;"Lot";"CommercialUnit". (1)Goodsmustbebothexistingandidentifiedbeforeanyinterestinthemmaypass. Goodsthatarenotbothexistingandidentifiedare"future"goods.Apurportedpresent saleoffuturegoodsorofanyinterestthereinoperatesasacontracttosell. (2)Theremaybeasaleofapartinterestinexistingidentifiedgoods. (3)Anundividedshareinanidentifiedbulkoffungiblegoodsissufficientlyidentifiedto besoldalthoughthequantityofthebulkisnotdetermined.Anyagreedproportionof thebulkoranyquantitythereofagreeduponbynumber,weight,orothermeasuremay totheextentoftheseller'sinterestinthebulkbesoldtothebuyerthatthenbecomes anownerincommon. (4)"Lot"meansaparcelorasinglearticlewhichisthesubjectmatterofaseparatesale ordelivery,whetherornotitissufficienttoperformthecontract. (5)"Commercialunit"meanssuchaunitofgoodsasbycommercialusageisasingle wholeforpurposesofsaleanddivisionofwhichmateriallyimpairsitscharacteror valueonthemarketorinuse.Acommercialunitmaybeasinglearticle(asamachine) orasetofarticles(asasuiteoffurnitureoranassortmentofsizes)oraquantity(asa bale,gross,orcarload)oranyotherunittreatedinuseorintherelevantmarketasa singlewhole. 2106.Definitions:"Contract";"Agreement";"Contractforsale";"Sale";"Present sale";"Conforming"toContract;"Termination";"Cancellation". (1)InthisArticleunlessthecontextotherwiserequires"contract"and"agreement"are limitedtothoserelatingtothepresentorfuturesaleofgoods."Contractforsale" includesbothapresentsaleofgoodsandacontracttosellgoodsatafuturetime.A "sale"consistsinthepassingoftitlefromthesellertothebuyerforaprice(Section2 401).A"presentsale"meansasalewhichisaccomplishedbythemakingofthe contract. (2)Goodsorconductincludinganypartofaperformanceare"conforming"orconform tothecontractwhentheyareinaccordancewiththeobligationsunderthecontract. (3)"Termination"occurswheneitherpartypursuanttoapowercreatedbyagreement orlawputsanendtothecontractotherwisethanforitsbreach.On"termination"all obligationswhicharestillexecutoryonbothsidesaredischargedbutanyrightbased onpriorbreachorperformancesurvives.[ 32 ]

(4)"Cancellation"occurswheneitherpartyputsanendtothecontractforbreachby theotheranditseffectisthesameasthatof"termination"exceptthatthecancelling partyalsoretainsanyremedyforbreachofthewholecontractoranyunperformed balance. 2107.GoodstoBeSeveredFromRealty:Recording. (1)Acontractforthesaleofmineralsorthelike(includingoilandgas)orastructureor itsmaterialstoberemovedfromrealtyisacontractforthesaleofgoodswithinthis Articleiftheyaretobeseveredbythesellerbutuntilseveranceapurportedpresent salethereofwhichisnoteffectiveasatransferofaninterestinlandiseffectiveonlyasa contracttosell. (2)Acontractforthesaleapartfromthelandofgrowingcropsorotherthingsattached torealtyandcapableofseverancewithoutmaterialharmtheretobutnotdescribedin subsection(1)oroftimbertobecutisacontractforthesaleofgoodswithinthisArticle whetherthesubjectmatteristobeseveredbythebuyerorbythesellereventhoughit formspartoftherealtyatthetimeofcontracting,andthepartiescanbyidentification effectapresentsalebeforeseverance. (3)Theprovisionsofthissectionaresubjecttoanythirdpartyrightsprovidedbythe lawrelatingtorealtyrecords,andthecontractforsalemaybeexecutedandrecorded asadocumenttransferringaninterestinlandandshallthenconstitutenoticetothird partiesofthebuyer'srightsunderthecontractforsale. 2108.TransactionsSubjecttoOtherLaw (1)Atransactionsubjecttothisarticleisalsosubjecttoanyapplicable: (a)[listanycertificateoftitlestatutesofthisStatecoveringautomobiles,trailers, mobilehomes,boats,farmtractors,orthelike],exceptwithrespecttotherights ofabuyerinordinarycourseofbusinessunderSection2403(2)whicharise beforeacertificateoftitlecoveringthegoodsiseffectiveinthenameofany otherbuyer; (b)ruleoflawthatestablishesadifferentruleforconsumers;or (c)statuteofthisstateapplicabletothetransaction,suchasastatutedealing with: (i)thesaleorleaseofagriculturalproducts; (ii)thetransferofhumanblood,bloodproducts,tissues,orparts; (iii)theconsignmentortransferbyartistsofworksofartorfineprints; (iv)distributionagreements,franchises,andotherrelationshipsthrough whichgoodsaresold;[ 33 ]

(v)themisbrandingoradulterationoffoodproductsordrugs;and (vi)dealersinparticularproducts,suchasautomobiles,motorized wheelchairs,agriculturalequipment,andhearingaids. (2)Exceptfortherightsofabuyerinordinarycourseofbusinessundersubsection (1)(a),intheeventofaconflictbetweenthisarticleandalawreferredtoinsubsection (1),thatlawgoverns. (3)Forpurposesofthisarticle,failuretocomplywithalawreferredtoinsubsection (1)hasonlytheeffectspecifiedinthatlaw. (4)Thisarticlemodifies,limits,andsupersedesthefederalElectronicSignaturesin GlobalandNationalCommerceAct,15U.S.C.Section7001etseq.,exceptthatnothingin thisarticlemodifies,limits,orsupersedesSection7001(c)ofthatActorauthorizes electronicdeliveryofanyofthenoticesdescribedinSection7003(b)ofthatAct. PART2.FORM,FORMATIONANDREADJUSTMENTOFCONTRACT 2201.FormalRequirements;StatuteofFrauds. (1)Acontractforthesaleofgoodsforthepriceof$5,000ormoreisnotenforceableby wayofactionordefenseunlessthereissomerecordsufficienttoindicatethata contractforsalehasbeenmadebetweenthepartiesandsignedbythepartyagainst whichenforcementissoughtorbytheparty'sauthorizedagentorbroker.Arecordis notinsufficientbecauseitomitsorincorrectlystatesatermagreeduponbutthe contractisnotenforceableunderthissubsectionbeyondthequantityofgoodsshown intherecord. (2)Betweenmerchantsifwithinareasonabletimearecordinconfirmationofthe contractandsufficientagainstthesenderisreceivedandthepartyreceivingithas reasontoknowitscontents,itsatisfiestherequirementsofsubsection(1)againstthe recipientunlessnoticeofobjectiontoitscontentsisgiveninarecordwithin10days afteritisreceived. (3)Acontractthatdoesnotsatisfytherequirementsofsubsection(1)butwhichisvalid inotherrespectsisenforceable: (a)ifthegoodsaretobespeciallymanufacturedforthebuyerandarenot suitableforsaletoothersintheordinarycourseoftheseller'sbusinessandthe seller,beforenoticeofrepudiationisreceivedandundercircumstancesthat reasonablyindicatethatthegoodsareforthebuyer,hasmadeeithera substantialbeginningoftheirmanufactureorcommitmentsfortheir procurement; (b)ifthepartyagainstwhichenforcementissoughtadmitsintheparty's pleading,orintheparty'stestimonyorotherwiseunderoaththatacontractfor salewasmade,butthecontractisnotenforceableunderthisparagraphbeyond thequantityofgoodsadmitted;or[ 34 ]

(c)withrespecttogoodsforwhichpaymenthasbeenmadeandacceptedor whichhavebeenreceivedandaccepted(Sec.2606). (4)Acontractthatisenforceableunderthissectionisnotunenforceablemerely becauseitisnotcapableofbeingperformedwithinoneyearoranyotherperiodafter itsmaking. 2202.FinalExpressioninaRecord:ParolorExtrinsicEvidence. (1)Termswithrespecttowhichtheconfirmatoryrecordsofthepartiesagreeorwhich areotherwisesetforthinarecordintendedbythepartiesasafinalexpressionoftheir agreementwithrespecttosuchtermsasareincludedthereinmaynotbecontradicted byevidenceofanyprioragreementorofacontemporaneousoralagreementbutmay besupplementedbyevidenceof: (a)courseofperformance,courseofdealing,orusageoftrade(Section1303); and (b)consistentadditionaltermsunlessthecourtfindstherecordtohavebeen intendedalsoasacompleteandexclusivestatementofthetermsofthe agreement. (2)Termsinarecordmaybeexplainedbyevidenceofcourseofperformance,courseof dealing,orusageoftradewithoutapreliminarydeterminationbythecourtthatthe languageusedisambiguous. 2203.SealsInoperative. Theaffixingofasealtoarecordevidencingacontractforsaleoranoffertobuyorsell goodsdoesnotconstitutetherecordasealedinstrument.Thelawwithrespectto sealedinstrumentsdoesnotapplytosuchacontractoroffer. 2204.FormationinGeneral. (1)Acontractforsaleofgoodsmaybemadeinanymannersufficienttoshow agreement,includingofferandacceptance,conductbybothpartieswhichrecognizes theexistenceofacontract,theinteractionofelectronicagents,andtheinteractionofan electronicagentandanindividual. (2)Anagreementsufficienttoconstituteacontractforsalemaybefoundevenifthe momentofitsmakingisundetermined. (3)Evenifoneormoretermsareleftopen,acontractforsaledoesnotfailfor indefinitenessifthepartieshaveintendedtomakeacontractandthereisareasonably certainbasisforgivinganappropriateremedy. (4)ExceptasotherwiseprovidedinSections2211through2213,thefollowingrules apply:[ 35 ]

(a)Acontractmaybeformedbytheinteractionofelectronicagentsofthe parties,evenifnoindividualwasawareoforreviewedtheelectronicagents' actionsortheresultingtermsandagreements. (b)Acontractmaybeformedbytheinteractionofanelectronicagentandan individualactingontheindividual'sownbehalforforanotherperson.Acontract isformediftheindividualtakesactionsthattheindividualisfreetorefuseto takeormakesastatement,andtheindividualhasreasontoknowthatthe actionsorstatementwill: (i)causetheelectronicagenttocompletethetransactionorperformance; or (ii)indicateacceptanceofanoffer,regardlessofotherexpressionsor actionsbytheindividualtowhichtheelectronicagentcannotreact. 2205.FirmOffers. Anofferbyamerchanttobuyorsellgoodsinasignedrecordthatbyitstermsgives assurancethatitwillbeheldopenisnotrevocable,forlackofconsideration,duringthe timestatedorifnotimeisstatedforareasonabletime,butinnoeventmaysuchperiod ofirrevocabilityexceedthreemonths;butinnoeventmaytheperiodofirrevocability exceedthreemonths.Anysuchtermofassuranceinaformsuppliedbytheofferee mustbeseparatelysignedbytheofferor. 2206.OfferandAcceptanceinFormationofContract. (1)Unlessotherwiseunambiguouslyindicatedbythelanguageorcircumstances (a)anoffertomakeacontractshallbeconstruedasinvitingacceptanceinany mannerandbyanymediumreasonableinthecircumstances: (b)anorderorotheroffertobuygoodsforpromptorcurrentshipmentshallbe construedasinvitingacceptanceeitherbyapromptpromisetoshiporbythe promptorcurrentshipmentofconformingornonconforminggoods,butthe shipmentofnonconforminggoodsisnotanacceptanceifthesellerseasonably notifiesthebuyerthattheshipmentisofferedonlyasanaccommodationtothe buyer. (2)Ifthebeginningofarequestedperformanceisareasonablemodeofacceptance,an offerorthatisnotnotifiedofacceptancewithinareasonabletimemaytreattheofferas havinglapsedbeforeacceptance. (3)Adefiniteandseasonableexpressionofacceptanceinarecordoperatesasan acceptanceevenifitcontainstermsadditionaltoordifferentfromtheoffer. [ 36 ]

2207.TermsofContract;EffectofConfirmation. SubjecttoSection2202,if(i)conductbybothpartiesrecognizestheexistenceofa contractalthoughtheirrecordsdonototherwiseestablishacontract,(ii)acontractis formedbyanofferandacceptance,or(iii)acontractformedinanymanneris confirmedbyarecordthatcontainstermsadditionaltoordifferentfromthoseinthe contractbeingconfirmed,thetermsofthecontractare: (a)termsthatappearintherecordsofbothparties; (b)terms,whetherinarecordornot,towhichbothpartiesagree;and (c)termssuppliedorincorporatedunderanyprovisionofthisAct. [2208.Reserved] 2209.Modification,RescissionandWaiver. (1)AnagreementmodifyingacontractwithinthisArticleneedsnoconsiderationtobe binding. (2)Anagreementinasignedrecordwhichexcludesmodificationorrescissionexcept byasignedrecordmaynotbeotherwisemodifiedorrescinded,butexceptasbetween merchantssucharequirementinaformsuppliedbythemerchantmustbeseparately signedbytheotherparty. (3)TherequirementsofSection2201mustbesatisfiedifthecontractasmodifiedis withinitsprovisions. (4)Althoughanattemptatmodificationorrescissiondoesnotsatisfytherequirements ofsubsection(2)or(3),itmayoperateasawaiver. (5)Apartythathasmadeawaiveraffectinganexecutoryportionofacontractmay retractthewaiverbyreasonablenotificationreceivedbytheotherpartythatstrict performancewillberequiredofanytermwaived,unlesstheretractionwouldbeunjust inviewofamaterialchangeofpositioninrelianceonthewaiver. 2210.DelegationofPerformance;AssignmentofRights. (1)Ifthesellerorbuyerassignsrightsunderacontract,thefollowingrulesapply: (a)Subjecttoparagraph(b)andexceptasotherwiseprovidedinSection9406 orasotherwiseagreed,allrightsofthesellerorthebuyermaybeassigned unlesstheassignmentwouldmateriallychangethedutyoftheotherparty, increasemateriallytheburdenorriskimposedonthatpartybythecontract,or impairmateriallythatparty'schanceofobtainingreturnperformance.Arightto damagesforbreachofthewholecontractorarightarisingoutoftheassignor's[ 37 ]

dueperformanceofitsentireobligationmaybeassigneddespiteanagreement otherwise. (b)Thecreation,attachment,perfection,orenforcementofasecurityinterestin theseller'sinterestunderacontractisnotanassignmentthatmaterially changesthedutyoformateriallyincreasestheburdenorriskimposedonthe buyerormateriallyimpairsthebuyer'schanceofobtainingreturnperformance underparagraph(a)unless,andonlytotheextentthat,enforcementofthe securityinterestresultsinadelegationofamaterialperformanceoftheseller. Eveninthatevent,thecreation,attachment,perfection,andenforcementofthe securityinterestremaineffective.However,thesellerisliabletothebuyerfor damagescausedbythedelegationtotheextentthatthedamagescouldnot reasonablybepreventedbythebuyer,andacourtmaygrantotherappropriate relief,includingcancellationofthecontractoraninjunctionagainstenforcement ofthesecurityinterestorconsummationoftheenforcement. (2)Ifthesellerorbuyerdelegatesperformanceofitsdutiesunderacontract,the followingrulesapply: (a)Apartymayperformitsdutiesthroughadelegateunlessotherwiseagreed orunlesstheotherpartyhasasubstantialinterestinhavingtheoriginal promisorperformorcontroltheactsrequiredbythecontract.Delegationof performancedoesnotrelievethedelegatingpartyofanydutytoperformor liabilityforbreach. (b)Acceptanceofadelegationofdutiesbytheassigneeconstitutesapromiseto performthoseduties.Thepromiseisenforceablebyeithertheassignororthe otherpartytotheoriginalcontract. (c)Theotherpartymaytreatanydelegationofdutiesascreatingreasonable groundsforinsecurityandmaywithoutprejudicetoitsrightsagainstthe assignordemandassurancesfromtheassigneeunderSection2609. (d)Acontractualtermprohibitingthedelegationofdutiesotherwisedelegable underparagraph(a)isenforceable,andanattempteddelegationisnoteffective. (3)Anassignmentof"thecontract"orof"allmyrightsunderthecontract"oran assignmentinsimilargeneraltermsisanassignmentofrightsandunlessthelanguage orthecircumstances,asinanassignmentforsecurity,indicatethecontrary,itisalsoa delegationofperformanceofthedutiesoftheassignor. (4)Unlessthecircumstancesindicatethecontrary,aprohibitionofassignmentof"the contract"istobeconstruedasbarringonlythedelegationtotheassigneeofthe assignor'sperformance. 2211.LegalRecognitionofElectronicContracts,Records,andSignatures (1)Arecordorsignaturemaynotbedeniedlegaleffectorenforceabilitysolelybecause itisinelectronicform.[ 38 ]

(2)Acontractmaynotbedeniedlegaleffectorenforceabilitysolelybecausean electronicrecordwasusedinitsformation. (3)Thisarticledoesnotrequirearecordorsignaturetobecreated,generated,sent, communicated,received,stored,orotherwiseprocessedbyelectronicmeansorin electronicform. (4)Acontractformedbytheinteractionofanindividualandanelectronicagentunder Section2204(4)(b)doesnotincludetermsprovidedbytheindividualiftheindividual hadreasontoknowthattheagentcouldnotreacttothetermsasprovided. 2212.ATTRIBUTION Anelectronicrecordorelectronicsignatureisattributabletoapersonifitwastheact ofthepersonortheperson'selectronicagentorthepersonisotherwiselegallybound bytheact. 2213.ELECTRONICCOMMUNICATION (1)Ifthereceiptofanelectroniccommunicationhasalegaleffect,ithasthateffecteven ifnoindividualisawareofitsreceipt. (2)Receiptofanelectronicacknowledgmentofanelectroniccommunication establishesthatthecommunicationwasreceivedbut,initself,doesnotestablishthat thecontentsentcorrespondstothecontentreceived. PART3.GENERALOBLIGATIONANDCONSTRUCTIONOFCONTRACT 2301.GeneralObligationsofParties. Theobligationoftheselleristotransferanddeliverandthatofthebuyeristoaccept andpayinaccordancewiththecontract. 2302.UnconscionablecontractorTerm. (1)Ifthecourtasamatteroflawfindsthecontractoranytermofthecontracttohave beenunconscionableatthetimeitwasmadethecourtmayrefusetoenforcethe contract,oritmayenforcetheremainderofthecontractwithouttheunconscionable term,oritmaysolimittheapplicationofanyunconscionabletermastoavoidany unconscionableresult. (2)Ifitisclaimedorappearstothecourtthatthecontractoranytermthereofmaybe unconscionablethepartiesshallbeaffordedareasonableopportunitytopresent evidenceastoitscommercialsetting,purpose,andeffecttoaidthecourtinmakingthe determination. [ 39 ]

2303.AllocationorDivisionofRisks. WherethisArticleallocatesariskoraburdenasbetweentheparties"unlessotherwise agreed",theagreementmaynotonlyshifttheallocationbutmayalsodividetheriskor burden. 2304.PricePayableinMoney,Goods,