The Uniform Commercial Code (UCC) streamlines commercial transactions between US states. Article 2 of the UCC regulates the sale of goods and has been adopted by all states except Louisiana. Different rules apply depending on whether the seller is considered a trader. Four warranties apply, but only two apply to non-commercial sellers.
The Uniform Commercial Code (UCC) is a group of uniform acts – state laws proposed by a federal commission on the uniformity of laws – developed with the intention of streamlining the laws of commercial transactions between the various states of the United States of America (US). One of the most important sections of the UCC is Article 2 of the UCC, which regulates the sale of goods to consumers. This is differentiated from the common law, which governs all other contracts between the parties.
Article 2 of the UCC has been adopted by all US states except Louisiana and governs the sale of goods. Assets are generally defined by this section as “all movable things” and it draws an explicit distinction between the sale of goods and the sale of immovable or intangible property. Most other transactions are generally governed by common law rules of bargaining between the parties.
Different rules apply depending on whether the seller of the good in question is considered a trader within the meaning of Article 2 of the UCC. Traders are generally defined as persons who regularly deal in goods of the type sold or not by their profession who present themselves as having special knowledge or expertise in the goods involved. Agreements between merchants and non-merchants offer greater protection to the non-merchant regarding the transaction. For example, in a contract between merchants, any additional terms articulated by the acceptor of an offer automatically become binding on the offeror unless he explicitly rejects the additional terms. This is distinct from a transaction involving at least one non-merchant party where only the terms clearly stated in the original offer will be binding on the agreement unless the parties accept the new terms as if it were a brand new agreement.
Under Section 2 of the UCC, there are four warranties: warranty of title, warranty against infringement, implied warranty of merchantability, and implied warranty of fitness for a particular purpose. While all four guarantees apply to merchants, only two apply to non-commercial sellers. The guarantee of title, which assures the buyer that the seller has valid and legal title to all goods sold in the transaction, applies to all sellers. In addition, the implied warranty of fitness for a particular purpose, which protects the buyer only if the seller knows the buyer’s particular purpose for the goods purchased and has particular knowledge of the goods in relation to that purpose, applies to all sellers.
The warranty against infringement and the implied warranty of merchantability only apply to commercial sellers within the meaning of Article 2 of the UCC. The guarantee against infringement ensures that the goods are free from infringement of the intellectual property of others. The implied warranty of merchantability warrants that the goods will be fit to serve the purpose for which like goods are generally used.
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