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When does the Uniform Commercial Code apply to a contract?

On Behalf of | Jun 26, 2015 | Contract Disputes |

If you do business in the state of Ohio, you likely deal with contracts. Depending on the nature of the transaction, the applicable law can be either the original, common-law based structure or the more recent Uniform Commercial Code (UCC) as it has been adopted by this state. But how do you know which body of law governs your agreement?

A business and commercial law firm experienced with the UCC can assist you in making sure that your contract properly includes and addresses UCC-specific considerations, as well as help you to interpret those considerations if the need arises.

The UCC has in its provisions a method to answer that question for you. Basically, the UCC will not apply to your contract unless it meets at least one of the triggers that the law defines. These include:

Goods: Article 2 of the UCC, which governs contracts, limits its application to contracts involving the sale and purchase of goods in the amount of $500 or more.

Merchants: Generally speaking, the UCC applies to agreements in which at least one of the parties is a “merchant” as it defines that term. Merchants are those who as part of their occupation deal with goods of the kind covered by the agreement, and who have knowledge or skill specific to the goods or practices.

Thus, a sale of a used car from one individual to another, even though the car is valued at more than $500, likely does not invoke UCC application because neither of the parties is a merchant; but the same car purchased from an automobile dealership would involve a merchant and the UCC would apply.

The importance of understanding how or whether the UCC applies to your contract is significant in that it contains many specific provisions and requirements for merchant sellers. If you are in the business of buying or selling goods, knowing what these provisions are and how they work is important not only in how you draft your business agreements but also in understanding your particular rights and obligations under Ohio commercial contract law.


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