Second, software must be either sold or supplied via a nonsale. Since software is normally licensed and is intangible technology, many people will not even consider the ucc in resolving software license issues. Nations convention on the international sale of goods to computer, software and data base. The extension of article 2 to software transactions which typically involve licensing in lieu of sales will be explored. This discussion is based generally on the virginia, maryland and pennsylvania uniform commercial code provisions. Uniform commercial code ucc article 2 flashcards quizlet. The uniform commercial code ucc is a set of laws that provide legal rules and regulations governing commercial or business dealings and transactions. Ucc stands for the uniform commercial code, which governs many different types of contract interactions. Many software license transactions will be covered by article 2 of the uniform commercial code ucc, despite the fact that most license documents, usually drafted by licensors, go to great pains to disclaim any transfer of ownership in the software or any copy thereof to the licensee. For example, article 2 of the ucc would apply to the sale of goods. Smart goods under ucc article 2 the reading room georgia. The uniform commercial code sale of goods fullerton. Article 2 holds merchants to a lower duty than nonmerchants.
Our software mimics the ucc financing statement to perfection. Software center catalogue is only available when you are connected to the ucc wired network and using a windows os. While ucc article 2 applies to the sale of goods, the common notion is it only applies to tangible things like wheat, pigs and shoes. Bear in mind, however, that the parties to sales or lease contracts are free to agree to terms different from those stated in the ucc.
Article 2 is meant to provide default rules and gapfillers that apply where two parties have not comprehensively addressed common issues in a written contract. An essay on article 2s irrelevance to licensing agreements. Article 2a covers similar issues for lease contracts. As such, there are numerous sections in the ucc which require timely action by both parties, the failure of which can result in very negative consequences. In some areas of law, such as torts, you rely more heavily on case law than on statutes in. One of the purposes of this class is to teach you how to read and use statutes. The question addressed by this article is whether article 2 of the uniform commercial code hereinafter u. To install the software go to the windows start button, search for software center and open the program. Our ucc corner series will provide an overview of various portions of the ucc, starting with article 2. Accordingly, article 2 fits awkwardly when applied to intangible goods like software. The first section in article 1, part 1 of the commercial code is numbered 1101, the second section in article 1, part 1 is numbered 1102, the first section in article 1, part 2 is. Uniform commercial code article ii, section 305 2 305, for example, is virginia code 8. This article shall be known and may be cited as uniform commercial codesales. A good was something movable and tangible, and a service was not.
First, software must be a good as defined by article 2. The revision of ucc article 2, sales in light of the united nations. The ucc does not address transactions or financing of real property. The applicability of article 2 to software depends upon two determinations. One consideration is the rights conferred to the purchaser by the agreement. Article 2 is a very active and dynamic article reflecting the reality of the marketplace. Appraise the choices made by attorneys in litigating a contracts case, and how the different levels of courts respond to their arguments. A merchant deals in goods of the kind covered by the contract. The recent and largely failed effort to revise article 2 sought to reclaim center. Courts treat sales of packaged software as a sale of goods and apply article 2 of the ucc the law of sales to disputes involving packaged software.
Article 2 of the ucc article 2 governs transactions in goods. The uniform commercial code ucc contains rules applying to many types of commercial contracts, including contracts related to the sale of goods, leasing of goods, use of negotiable instruments, banking transactions, letters of credit, documents of title for goods, investment securities, and secured transactions. In rrx industries, although the court recognized that software must be a good for article 2 to apply, the court applied article 2 without any discussion of whether it was a good. The code has been a longterm, joint project of the national conference of commissioners on uniform state laws nccusl and the american law institute ali, which began drafting its first version in 1942. When the ucc was drafted, a good was the simple opposite of a service. Ucc 2bucita resurrectedalis principles of the law of. Theoretically, the ucc standardizes business laws in these. If the parties reach a basic agreement but the offeree has added terms, there will be an. In particular, when nccusl began the revision process, it wanted to make article 2 govern all aspects of contracts for the sale of computer software.
The sections on remedies in article 2 are rather extensive. But the court in rottner also pointed out that ucc 2105 from delawares code defines covered goods as those that are movable at the time of identification to the contract for sale. As enacted and amended by the washington legislature, the uniform commercial code is divided into eleven articles, which are subdivided into a number of parts. This article provides only the most cursory summary of ucc article 2. Why article 2 cannot apply to software transactions by. The uniform commercial code ucc is a group of uniform acts state laws proposed by a federal commission on the uniformity of laws developed with the intention of streamlining the laws of commercial transactions between the various states of the united states of america us. Explain whether or not article 2 of ucc would apply to the sale of a custom software package such as an hr management system. Keep in mind that the ucc law can vary from state to state. Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken. For more details, check the additional nolo articles covering some of the specific parts and sections into which article 2 is divided. Article 2 applies to sales of software where the ancillary services offered are similar to those generally accompanying sales of computer systems. Discounted software packages such as mircrosoft office are avaialble to ucc registered students. Article 2 of the ucc, which governs sales, limits its scope to goods. But when a software license has all the underpinnings of a sale, the ucc will apply.
Contracting out of article 2 using a license label. Article 2 purports to be a preemptive, systematic and comprehensive enactment of an entire field of law. Today, almost sixty years after the states widely adopted the uniform commercial code ucc, the line between goods and services is more blurred than ever. The waning importance of revisions to ucc article 2 scholarly. The combined higher education software team, chest project negotiates special deals for the purchasing and licensing of software for third level educational institutions. Under illinois law, whether a sale of software constitutes a transactions in goods depends on various considerations. The uniform commercial code is obsolete in its coverage in article 2 and in its cousin, article 2a. The ucc regulates the transfer or sale of personal property. Article 2 of the ucc governs the sale of goods, which is defined as all things that are movable at the time of identification to a contract for sale.
Given this, it seems eminently logical that the ucc should have an article 2 complement written specifically for intangible goods. The ucc is the longest and most elaborate of the uniform acts. Changes to article 2 scope committee changes to uniform commercial code article 2 sales section 2102. Article 2 is the most applicable to commercial transactions in the agriculture context. Demonstrate how the elements of a breach of warranty claim are satisfied. New ucc forms are based on the revised article 9 of the uniform commercial code law that becomes effective 712001. Today, most important contract law theory developments and practice innovations occur outside the realm of article 2. Mcgonigal, application of uniform commercial code to software contracts, 2 computer l. This article shows that so many of its main conceptual components are repudiated by federal law that it is nonsensical to apply article 2 to software transactions, even in the mass market. Article 2 of the uniform commercial code ucc is fading in commercial and theoretical importance. Article 2 of the ucc applies to transactions in goods. In compumed systems article 2 was applied without any discussion of whether software was a good. Article 2 applies to merchants, but never to nonmerchants. In current law ucc article 2, this type of clause must be conspicuous and in some states might have to be specifically agreed to unless both parties to the contract are merchants.
Most states will have several areas of contract law. In the case of other types of material other law applies. When applicable, cisg preempts article 2, sales, of the ucc. There are other sections of the ucc applicable as between merchants, too. Article 2 of the ucc sets for the requirements for sales contracts as well as the duties and obligations of the parties involved in the sales contract. Article 2 contains several provisions that either apply only to merchants or impose a greater duty on.
Bank deposits and collections and other modern payment systems by stephen c. Article 2 is a popularly cited provision in this body of statutes, since it governs contracts for the sale of goods between merchants or between a merchant and a nonmerchant. Under ucc article 2, terms regarding payment, delivery and price are. Price payable in money, goods, realty, or otherwise. A strategy that should not work for software products, respectively. Title 4 uniform commercial code colorado article 2 sales. However, despite the goals of certainty and uniformity, one of the thorniest issues in sale of goods transactions is how best to determine whether article 2 applies totransactions involving the provi sion of goods and nongoods, such as services or software.
The uniform commercial code article 2b the uniform commercial code ucc governs most contracts for the sale of goods in the united states. In addition, the article will analyze whether the u. Ucc is an ansi c compiler which supports linux and windows running on intel x86 platform. Article 2 of the ucc will apply to the sale of goods and other cases or statutes will apply to services, real estate and other contracts.
Goodrich was the chairman of the editorial board of the original 1952 edition, and the code itself was drafted. What is the definition of goods under article 2 of the ucc. See also conley, supra note 4, at 2 3 article 2 more liberal than common law with regard to admissibility of parol evidence, formalities required to form a contract, and the power of a court to supply missing contract. Explain whether or not article 2 of ucc would appl. Article 2 of the uniform commercial code applies to transactions in goods. One of the most prominent sections of the ucc is ucc article 2, which governs the sale of goods to consumers. Article 2 does not explicitly mention software on file with the. But with a saas contract, since no software is being delivered, where the only thing actually being delivered is access to and use of a website, wouldnt that make the contract squarely outside the meaning of a sale of goods governed by article 2 of the uniform commercial code ucc. Commercial transactions national agricultural law center.
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