Article 2 of Uniform Commercial Code
Article 2 of UCC deals with the sale of goods. This article is concerned with the construction sector and lays down the framework to settle the dispute related to the same. All the movable items are included in this article. However, there are certain exclusions to the applicability of UCC because it does not include labor contracts. Construction contracts are contracts that deal with goods and services, which can also be termed as â€œhybrid contractsâ€. Therefore, in some cases, the UCC is not applicable or is difficultly applicable.
Article 2 of UCC basically deals with the contract formation and the rights as well as obligations available to both the parties during and after the performance.
Application of Uniform Commercial Code
The applicability in question is dependent on the predominant purpose rule. According to this rule, if the main purpose of the contract is the sale of goods, with labor or other services, then UCC will be applicable. However in other cases, like if the predominant purpose is providing the service, then UCC will not apply. In exceptional cases, it has been observed that the court only applies UCC to the portion of hybrid contracts related to the sale of goods, but the rest of the contract is left out, resulting in the inapplicability of the said code.
Many enterprises/businesses find it difficult to decide whether the UCC is applicable or not, where the primary objective is vague. To solve this difficulty, the major rules are as follows:
UCC is applicable to a hybrid construction contract where the performance of significant labor or service at Jobsite is not relevant.
A hybrid contract is a purchase order and is not a subcontract.
UCC finds it difficult to apply in a prime contract with an owner, which is a contract only for service.
Contract Formation under UCC
From a traditional perspective, the contract is formed when one party offers and the other party accepts such an offer on the mutually agreed terms and conditions. However, UCC ignores the traditional perspective and follows the more practical approach:-
The contract does not need to satisfy all the terms and conditions. The acceptance may state the different terms and conditions also.
There is no hard and fast rule for the method of acceptance of the contract. Rather the methods that deem fit to both parties are acceptable.
The rule is that the contract of sale of a good with a value exceeding $500 is enforceable only if a written contract is formed stating the contract of sale between the parties.
It is essential that the parties to a contract write all the important terms and conditions related to the said contract.
This code also deals with the risk of losses and indemnifies the parties for the same.
There are certain rights and obligations which UCC provides to the buyer as well as to the seller. Before making payment or accepting the products, the buyer has the right to inspect them completely. UCC links the inspection and payment. In cases where prior payment is made, the buyer still has the right to inspect the goods at the time of delivery. The buyer has the right to reject goods if they do not comply with the contract. Bit such rejection must be made within a reasonable time giving notice to the seller. However, the seller has a right to cure the defect in the goods due to which the buyer has rejected them.
Warranties under UCC:
The protection against infringement is given under UCC. The title of the goods is protected.
The implied warranty of merchantability makes the goods fit for ordinary use. This is known as the implied warranty of fitness.
UCC describes certain warranty disclaimers regarding the warranty.
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