Introduction

Question 1

What is the UCC?

Answer 1

Set of law that govern commercial transactions

Question 2

What is Article 2?

Answer 2

Specific Section in the UCC that governs contracts for the sale of goods. Does not apply to non-tangible things

Question 3

What is the Hierarchy and Application of Ambiguous Terms? UCC 1-303 (5)

Answer 3

1. Express Terms: look to the language of the agreement/contract.
2. Course of Performance (1-303a): SAME contracting PARTIES and SAME contract but previous installments of THIS contract, to find the meaning of the terms
3. Course of Dealing (1-303b): SAME TWO PARTIES dealing with each other but looking at DIFFERENT PRIOR contracts to ascertain the meaning of THIS contract.
4. Usage of Trade(1-303c): community norms of which the parties are or should be aware. What people in the same industry would find to be customary
5. UCC Default Terms

Question 4

Mixed Contracts: When a contract is mixed between goods and services, what are the three tests that determine which laws apply to the contract?

Answer 4

1. Predominant Purpose Test
2. Gravamen of the Action Test
3. Bifurcation Approach

Question 5

Mixed Contract: What is the Predominant Purpose Test? (Majority Rule)

Answer 5

Used by courts to determine whether a mixed contract falls under Article 2 of the UCC or common law

1. If goods = Article 2 applies to the whole transaction, even the services portion of it
2. If Services = Article 2 doesn’t apply/ Common Law applies to the transaction

Question 6

Mixed Contract: What is the Gravamen Test? (Minority Rule)

Answer 6

Court determines whether the source of the complaint is the goods or the services portion of the transaction

1. If problem arises with goods = Article 2 applies even if the purpose of the transaction is services
2. If problem arises with services = Article 2 does not apply even if the purpose of the transaction is goods

Question 7

Mixed Contracts: What is the Bifurcation Approach?

Answer 7

Splits the contract into two parts
1. Portion dealing with goods = Governed by the UCC

2. Portion dealing with services = Governed by Common Law

Parties can agree upfront to have different laws apply to different states

Question 8

What is Article 2A?

Answer 8

Governs the leasing of goods, where the owner (lessor) grants another party (lessee) the right to use the goods for a certain period of time, usually in exchange for payment

Question 9

Distinguishing True Leases from Disguised Sales:

Answer 9

UCC looks to substance over intent and form when determining whether a purported lease of goods is in fact must be characterized as a sale and financing

Question 10

What are the two tests to determine whether a transaction is a True Lease v. Disguised Sale?

Answer 10

1. Economic Realities Test
2. Bright Line Test

Question 11

True Lease v. Disguised Sale: The Economic Realities Test

Answer 11

Focuses on the real attributes of the transaction rather than the parties intentions