Are There Fundamental Principles That Article 2 Always Applies?
Yes. Certain fundamental principles apply to the sale of all goods. Failure to adhere to the fundamental principles may take the transaction outside of the protection of the Uniform Commercial Code. One fundamental concept is that of good faith. Courts presume that all parties to a contract are acting in good faith. The U.C.C. defines good faith as honesty in fact. In order to qualify for the protections of the U.C.C., all parties to a contract for the sale of goods must deal honestly with each other as to the essential facts of the contract.
Another basic concept of the U.C.C. is that all contracts for the sale of goods must be fundamentally fair. If a contract is so unfair that it may be said to shock the conscience, a Court may find that the contract is unconscionable. Courts do not recognize contracts that are determined to be unconscionable. The term is broad and there is not a strict line drawn to determine whether or not a contract is unconscionable. The determination is determined on a casebycase analysis.
If a Court finds that a contract is unconscionable, the court may (1) void the entire contract, (2) enforce the contract without including the unconscionable clause, or (3) so limit the application of the clause that it will avoid the unconscionable result. A final concept fundamental to the U.C.C. is that of a merchant. Article 2 distinguishes between merchants and nonmerchants. In most situations, the U.C.C. holds merchants to a higher standard.
Other UCC Filing FAQs
Consumer Protection Sub-categories
