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SCOPE OF UCC ARTICLE 2Article 2 of the UCC governs salesand contracts for thesale of goods, pursuant to which a sellertransfers to abuyer(1)title(formal right of ownership) to(2)goods(including growing crops and timber to beharvested; fixturescapable of severance withoutharming the real property to which they are attached;and subsurface oil, gas, and other minerals, andstructures attached to realty, that the seller removes)(3)in exchange for moneyor other value.Article 2 governs onlytangible personalproperty, whichhas inherentphysical valueandcan be moved from place to place.Article 2 doesnotgovern contracts for services, realproperty, or intangiblepersonal property (e.g., intellectualproperty, stocks and bonds).Ch. 15: The Formation of Sales and Lease Contracts - No. 1Business Law Today: Standard Edition (9th ed.)
“MIXED” CONTRACTSA large number of disputes involving goods also involveservices, real property, or intangible or immovable personalproperty – none of which are within Article 2’s scope. Inmost such cases, courts decide whether to apply Article 2using the predominant purpose test, which hinges on thebuyer’s primary objective in buying the goods and non-goods.If the buyer’s primary purpose was to acquire thegoods, then Article 2applies to the wholetransaction(including the non-goods part of it).If the buyer’s primary purpose was to acquire the non-goods, then Article 2 does not applyto any part ofthe transaction.A minority of courts will apply the gravamen of theactiontest, which hinges on what part of theunderlying transaction gives rise to the dispute.If the buyer is complaining about the goods,Article 2 applies to the dispute(even if herpredominant purpose was to buy non-goods).Ch. 15: The Formation of Sales and Lease Contracts - No. 2Business Law Today: Standard Edition (9th ed.)
If the buyer is complaining about the non-goods,Article 2 does not apply to the dispute(even ifher predominant purpose was to buy goods).Ch. 15: The Formation of Sales and Lease Contracts - No. 3Business Law Today: Standard Edition (9th ed.)
MERCHANTSMerchant: A person who(1)regularly deals in goods of the kindinvolved in thesales or lease contract,(2)holds herself out as having unique knowledge andskill, or(3)employs a merchantas a broker, agent, or otherintermediary.No Effect on Article 2’s Applicability:Whether or not aparty is a merchant doesnot, contrary to what manystudents, lawyers, and even a few judges think, determinewhether UCC Article 2 governs a transaction.Special Rules for Merchants:Article 2 includes a numberof provisions that apply only to merchants or holdmerchants to a different standard of conduct than non-merchants (e.g., the merchant’s firm offer rule).