Chapter 21 Sales and Lease Contracts
The common law—what we have been studying so far
Statutory law—state legislatures pass laws that only apply within the borders of their states
The Uniform Commercial Code (a.k.a. the “UCC” or the “Code”)
is a uniform statutory law that state
legislatures have passed governing commercial transactions, including contracts for the sale of goods
and secured transactions
General contract law continues to apply where the Code has not specifically modified the law.
contract law also continues to govern all contracts outside the scope of the Code, including employment
contracts, service contracts, insurance contracts, contracts involving real property, and contracts for the sale of
intangibles such as stocks, bonds, patents, and copyrights.
We will focus our studies on article 2, which governs sales contracts—meaning contracts for the sale of goods—and to a
lesser extent, 2A, which governs leases
Article 2 modifies some of the common law contract requirements that we have just finished studying.
In general, the rules is that whenever there is a conflict between a common law contract rule and a UCC rule, the
UCC rule controls.
In other words, when the UCC addresses a certain issue, the UCC rule is the one we follow.
When the UCC does not address a particular issue, we follow the common law.
Leases (Article 2A)
A lease is defined as a "transfer of rights to possession and use of goods
for a term in return for consideration,
UCC §2A- 103(1)(j).
Stated another way, a lease of goods is a transfer of the right to possess and use goods
belonging to another for some form of payment.
The person who gets the goods does not actually own the goods.
Leasing is just a way for a lessee to get the
benefits of using goods without having to actually spend all the money to purchase the goods
Note that this does not cover leases related to real property (it doesn’t govern your lease with your landlord)
is the person who transfers the right to possession (the right to use)
is the person who, because of the lease, gets the right to use the good
A sales transaction consists of transferring title of goods for a price by an owner to the buyer.
The “price” can be money, other goods, real estate, or services
gift is not a sale because, although title to the object passes, it was not passed for a “price”
"Goods" are defined as movable, tangible, personal property. §2-105
Tangible property has a physical existence, it can be touched or seen and “moveable” means that the item can be
carried from place to play
Article 2 and Article 2A are intended to modernize, clarify, simplify and make uniform the law of sales and leases while
providing the flexibility to expand as unforeseen and new circumstances demand.
The Code's policy is to promote
It is based on the following concepts: