Sale of Goods

Transactions for the sale (and lease) of goods is governed mainly by sales laws of each state. Every state, with the exception of Louisiana, has adopted Article 2 of the Uniform Commercial Code as the main body of law regulating transactions in goods.

Goods are defined as all things movable and identified to the contract of the sale. They do not include secured transactions, leases, money exchanged as the price or real property (land and property permanently attached to a piece of land).

UCC 2 regulates every phase of a transaction for the sale of goods and provides remedies for problems that arise. It provides for implied warranties of merchantability and fitness. The UCC also includes a duty of good faith that is applicable to all of the sections. If a contract contains unconscionable provisions, a court may discard the contract or the provisions.

Leases traditionally have been governed by Article 2 or Article 9 (secured transactions) of the UCC. This caused confusion and disparate application of the law to leases. In 1987, Article 2A was added to the UCC to regulate leases for goods. It has been adopted, or is being considered for adoption, in a number of states.

Federal law has a limited impact on transactions for the sale of goods. The Bankruptcy Code (Title 11) regulates claims arising from sales transactions in bankruptcy cases. The Magnuson-Moss Warranty Act regulates explicit and implied warranties. The Consumer Credit Protection Act provides protection to consumers entering into leases.

Last updated: Sept. 30, 2008

The content on this page was developed in partnership with the Legal Information Institute, Cornell Law School.