Supply Chain World - Volume 7, Issue 3 - 17

CONTRACTS

Merchants cannot ignore the
terms and conditions that come
along with an invoice - they may
be bound by them.

affect parties' transactions. This is an
overview of the Uniform Commercial
Code (the "UCC"), its impact on commercial contracts, and several clauses
to consider expressly addressing in
commercial contracts.

The Rules Governing
Commercial Transactions
The UCC governs commercial transactions in the United States. The UCC,
however, is a model code, so it does
not have legal effect in a state unless its
provisions are enacted by the individual state legislatures as statutes. Currently, the UCC (at least in some part)
has been enacted in all 50 states, the
District of Columbia, Puerto Rico and
the Virgin Islands.
Article 2 of the UCC governs commercial transactions for the sale of goods
between merchants. See U.C.C. § 2-102.
The UCC defines "merchants" as "a
person who deals in goods of the kind
or otherwise by his occupation holds
himself out as having knowledge or
skill peculiar to the practices or goods
involved in the transaction or to whom
such knowledge or skill may be attributed by his employment of an agent or

broker or other intermediary who by his
occupation holds himself out as having
such knowledge or skill." U.C.C. § 2-104.
Thus, those individuals whose job it is to
sell goods are typically governed by that
state's commercial code (modeled after
the UCC).
The UCC recognizes that businesses
may enter into deals without always
agreeing to every term. Nevertheless,
the businesses intended to enter into
the agreement. The UCC provides
rules for interpreting such agreements.
See, e.g., U.C.C. § 2-204(3). And in the
event terms are missing or contradictory, the UCC provides the rules to
interpret the contract.
Below are examples of terms that, if
not agreed upon by the parties or intentionally left for later, may be controlled
by the UCC:
+ Price - The UCC provides the
remedy when the parties have not
settled on a price. In instances
where nothing is said as to price; or
the price is left to be agreed by the
parties and they fail to agree; or the
price is to be fixed in terms of some
agreed market or other standard as
set or recorded by a third person or

agency and it is not set or recorded;
the contract's price is the reasonable price at the time of delivery.
U.C.C. § 2-305.
+ Delivery - The UCC provides
that unless otherwise agreed, all
goods must be tendered in a single
delivery - not piecemeal - and
payment is due only on such tender. U.C.C. § 2-307.
+ Timing - If the timing of delivery of
the goods is not agreed upon or not
provided, the UCC dictates that the
goods be delivered within a reasonable time. U.C.C. § 2-309.
+ Warranties - If the agreement
between the merchants is silent,
the UCC also adds warranties to
the goods. Under Section 2-312, the
UCC warrants that the "title conveyed shall be good and its transfer
rightful" and "the goods shall be
delivered free from any security or
other lien or encumbrance." Under
Section 2-314, the UCC creates
implied warranties that the goods
are merchantable, meaning they,
among other things, "pass without
objection in the trade under the
contract description," "are fit for
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