UCC vs. Common Law Contracts: When Each Applies

UCC Article 2 governs contracts for the sale of goods (movable, tangible personal property). Common law governs everything else: services, real estate, employment, and intellectual property. This distinction is fundamental and frequently tested.

Goods are tangible, movable items at the time of identification to the contract. Examples: cars, furniture, raw materials, clothing, electronics. NOT goods: land, services, intellectual property, investment securities (governed by other UCC articles).

Many contracts involve both goods and services (e.g., hiring a contractor to install a furnace). Courts apply the predominant purpose test: Is the primary purpose of the contract the sale of goods or the provision of services? If goods predominate, the entire contract is governed by the UCC. If services predominate, common law applies to the entire contract.

Contract formation:
- UCC is more flexible: no consideration needed for firm offers (merchant's firm offer, §2-205), and acceptance can include different terms (battle of the forms, §2-207)
- Common law requires mirror image acceptance and consideration for all modifications

Statute of Frauds:
- UCC: contracts for goods $500+ must be in writing (§2-201)
- Common law: contracts not performable within one year, land sales, suretyships

Warranties:
- UCC provides implied warranties of merchantability and fitness for a particular purpose
- Common law has no equivalent implied warranties

The first thing to determine on any contracts exam question is whether the UCC or common law applies. The entire analysis changes based on this threshold question. State it explicitly: “Because this contract is for the sale of goods, UCC Article 2 governs.” Then apply the UCC-specific rules throughout your answer.