Sales of Goods Under UCC Article 2: Warranties and the Perfect Tender Rule

Scope: transactions in goods

Unless the context otherwise requires, this Article applies to transactions in goods …

UCC § 2-102

“Goods” means “all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale,” other than money, investment securities and things in action (§ 2-105(1)). As a result, Article 2 covers cars, equipment and inventory, but not real estate, services or bank accounts.

Flexible formation

A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

UCC § 2-204(1)

Article 2 also fills gaps. Under § 2-204(3), a contract “does not fail for indefiniteness” if the parties intended to contract and there is “a reasonably certain basis for giving an appropriate remedy.”

Warranties

An express warranty arises from “Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain” (§ 2-313(1)(a)). In addition, a merchant seller gives an implied warranty “that the goods shall be merchantable” unless it is excluded or modified (§ 2-314(1)). Merchantable goods must at least “pass without objection in the trade under the contract description.”

The perfect tender rule

… if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may (a) reject the whole; or (b) accept the whole; or (c) accept any commercial unit or units and reject the rest.

UCC § 2-601

The rule is subject to exceptions, such as installment contracts and the seller’s right to cure. Each state enacts Article 2 with its own variations, so check your state’s commercial code.

Researching UCC Article 2 in your state

To research UCC Article 2 for a real matter, start with the primary sources. For example, read the statute, the rule and the documents in your own file. Then look for recent appellate decisions from your state, because they control how local courts read the law. After that, compare what you found with the federal rules that may also apply. Our state procedures guide and the Research Center can help you find and check each source.

Sources and further reading

Official sources used on this page:

• law.cornell.edu
• law.cornell.edu
• law.cornell.edu
• law.cornell.edu
• law.cornell.edu

Related reading on Lawtopolis:

• The Statute of Frauds: Which Contracts Must Be in Writing
• Breach of Contract and Remedies: Damages, Substantial Performance and Specific Performance
• Negotiable Instruments (UCC Article 3)