UCC 2-201

Definition

UCC 2-201, also known as the Statute of Frauds for the sale of goods, requires contracts for the sale of goods priced at $500 or more to be in writing to be enforceable. This section emphasizes the importance of written documentation in commercial transactions to prevent fraud and misunderstandings between parties involved in the sale of goods.

5 Must Know Facts For Your Next Test

1. UCC 2-201 specifically applies to contracts for the sale of goods valued at $500 or more, which must be in writing.
2. An exception exists under UCC 2-201 where oral contracts may be enforceable if there is a confirmation of the contract between merchants.
3. The written contract must be signed by the party against whom enforcement is sought, indicating their acceptance of the terms.
4. Part performance can sometimes overcome the writing requirement, especially if one party has begun to fulfill their obligations under the contract.
5. UCC 2-201 aims to reduce disputes and provide clarity in commercial transactions by ensuring that significant sales agreements are documented.

Review Questions

• How does UCC 2-201 enhance the reliability of contracts in commercial transactions?
  • UCC 2-201 enhances reliability by mandating that sales contracts valued at $500 or more be in writing. This requirement reduces the risk of misunderstandings and fraudulent claims because it provides a clear record of the agreement. Written contracts serve as evidence that can be referred to in case disputes arise, thereby offering both parties protection and assurance regarding their rights and obligations.
• Discuss the exceptions to the writing requirement established by UCC 2-201 and how they affect contract enforceability.
  • UCC 2-201 allows certain exceptions to its writing requirement, such as oral agreements that are confirmed through written confirmation between merchants. Additionally, if a party has partially performed their obligations under an oral contract, this can also lead to enforceability despite lacking a formal written document. These exceptions create flexibility within commercial practices, allowing businesses to adapt while still maintaining some level of legal protection.
• Evaluate the implications of UCC 2-201 on modern business practices and its impact on electronic contracts.
  • UCC 2-201's requirement for written contracts significantly influences modern business practices by emphasizing documentation and clarity in sales transactions. With the rise of electronic commerce, understanding how this provision applies to electronic contracts is crucial. Courts have increasingly recognized electronic signatures and documents as valid under UCC 2-201, thus accommodating new technologies while ensuring that parties still adhere to the principles intended by the statute. This adaptability supports both traditional and digital commerce while safeguarding against potential disputes.

Related terms

Statute of Frauds: A legal doctrine that requires certain types of contracts to be in writing and signed to be enforceable.

Goods: Tangible items that are movable at the time of identification to the contract for sale, including all things that are considered personal property.

Merchant: A person or entity that deals in goods of the kind involved in the transaction or holds themselves out as having specialized knowledge or skill regarding those goods.