Uniform Commercial Code (UCC) § 2-201

Definition

Uniform Commercial Code (UCC) § 2-201 deals with the Statute of Frauds as it applies to contracts for the sale of goods. This section requires that certain contracts be in writing and signed by the party against whom enforcement is sought if the sale of goods is priced at $500 or more. This rule helps ensure that there is a clear record of the agreement, reducing the potential for disputes over terms and existence of the contract.

5 Must Know Facts For Your Next Test

1. UCC § 2-201 specifies that contracts for the sale of goods priced at $500 or more must be in writing to be enforceable.
2. The writing requirement can be met by any written confirmation that includes essential terms, even if it lacks a formal contract.
3. If one party is a merchant, they may be bound by a confirmation sent by the other party, even if they did not explicitly agree to it.
4. Certain exceptions exist under UCC § 2-201, such as for specially manufactured goods or if the goods have been accepted or paid for.
5. This section aims to provide certainty and prevent fraud in transactions involving significant financial commitments.

Review Questions

• How does UCC § 2-201 ensure clarity and reduce disputes in contracts for the sale of goods?
  • UCC § 2-201 establishes a writing requirement for contracts involving sales of goods priced at $500 or more. This written agreement serves as clear evidence of the terms agreed upon by both parties, reducing misunderstandings and disputes regarding what was promised. By requiring signatures, the law also ensures that both parties are aware and agree to the terms, further promoting clarity in commercial transactions.
• Discuss how UCC § 2-201 treats contracts between merchants differently than those between non-merchants.
  • UCC § 2-201 provides a unique provision for merchants, recognizing their expertise and the rapid pace of commerce. If one merchant sends a written confirmation of a contract to another merchant, this confirmation may bind the recipient even without their signature if they do not object within a reasonable time. This reflects an understanding that merchants operate in a fast-moving environment where verbal agreements often precede formal written contracts.
• Evaluate the implications of UCC § 2-201's exceptions to the writing requirement on commercial transactions.
  • The exceptions under UCC § 2-201, such as specially manufactured goods or acceptance of goods, significantly impact how commercial transactions are conducted. For instance, if goods are specially made for a buyer and cannot be sold to others, this allows for enforcement without a written contract. Similarly, if a buyer accepts or pays for goods, it can establish a binding agreement even without written evidence. These exceptions balance flexibility in commercial practices with the need for some level of documentation, promoting efficiency while still aiming to protect parties from fraud.

Related terms

Statute of Frauds:

A legal doctrine that requires certain types of contracts to be in writing and signed to be enforceable, thus preventing fraud and misunderstandings.

Goods: Tangible items that are movable at the time of identification to the contract for sale, which are subject to UCC regulations.

Merchant:

An individual or business entity that deals in goods of the kind involved in a sales transaction, possessing expertise or special knowledge about those goods.