I’m trying to study for my Business Law course and I need some help to understand this question.
How has the Uniform Commercial Code (UCC) changed the Common Law of Contracts? Do parties to a contact get to choose the Common Law or the UCC? Does the UCC apply to everyone? Do you think that the Federal Government should make a standard set of laws for Contracts?
Just do make comment # 1 to 3 down below only
The Uniform Commercial Code (UCC) has limited the scope of the Common Law of Contracts. Nearly all of the states adopted the UCC which governs commercial transactions. The main goal of the UCC was to standardize the laws for commercial transactions since they are often conducted across state lines. Interestingly enough, some of the UCC principles have actually had an impact on the Common Law of Contracts, meaning that courts have adopted these principles in effect in their rulings. For example, the UCC introduced the idea of unconscionability but the courts have also applied this concept in cases outside of the sale of goods/commercial transactions.
The UCC does not apply to everyone. It specifically applies to transactions in which at least one party is a merchant. That said, “merchant” is determined on a case by case basis depending on the facts and circumstances, so the UCC has the potential to apply to anyone if they are conducting business in the manner of a merchant. One can always contract out of something, meaning the terms could be so clear and written in such a way to circumvent some of the provisions of the UCC. However, there is no actual choice to “opt out” of the application of the UCC.
While the federal government does have the authority to regulate interstate commerce, I do not believe it should create a standard set of laws for contracts. Parties have the freedom to contract, and while a standardized laws may seem easier, it would encroach on that right and potentially interfere with economics.
Per my understanding, the Uniform Commercial Code (UCC) was created to establish some specific rules to govern the sales of goods. These rules brought more efficiency and defined standards to the commercial transactions, specially for the transactions made across state lines. The UCC also brought more flexibility to the commercial transactions, as it has altered the mirror image rule’s application to merchants’ sale of goods in a way that an acceptance that is not exactly under the same terms as the offer can still be considered effective. The UCC also eliminated the necessity of having all the essential terms determined at the inception of the contract.
But, the UCC is not applicable to everyone. It can be applied only to the transactions involving goods (tangible items). It excludes services, real estate and insurance transactions, which are governed by the common law of contracts.
In my opinion, the Federal Government should make a standard set of laws for all type of contracts (including services, real estate, insurance, etc.). That would reduce the issues that the court commonly must deal with. But, considering that each state has its own rules and practices, I believe that it would be very difficult to converge all the different issues into a unified set of laws.
Common Law and Uniform Commercial Code (UCC) have impacted each other over the years. Common law of contracts existed first and was essentially the foundation in developing the Articles of the UCC. Common law relies on definiteness of the contract terms, while the UCC relies on the intentions of the parties and is more relaxed. The UCC has helped modern common law tolerate a lower degree of definiteness.
Parties to a contract do not get to decide which laws their contract falls under. The nature of the contract is the deciding factor. If the contract is for the sale of goods, UCC will apply. The UCC applies to commercial contracts, typically including at least one merchant. If the contract is not for the sale of goods, such as services, real estate, bonds, etc. then common law applies.
The UCC seeks to find uniformity in contract law across the states. This allows interstate contract transactions to be easier to navigate without the confusion of individual state common laws. I believe if the Federal Government would expand the Articles to include services, real estate, etc. this would not only be easier on the parties involved by also on the court system as a whole.