UCC Can Apply to Common Law

The Uniform Commercial Code, known as the UCC, was published by a collaboration of legal scholars and practicing lawyers who suggested the code as a way to make many of the state laws regarding sales of goods more uniform. There was also a great need to begin addressing modern ways of doing business and forming contracts.

While many states adopted slight variations to the UCC, the UCC was largely adopted as it was originally suggested throughout the country. Prior to the UCC, common law (opinions by judges) largely controlled many of the issues related to the sale of goods, secured transactions and negotiable instruments.

Since the UCC was adopted in Texas, the Texas UCC now controls over the common law in certain areas of the law, such as the sale of goods, negotiable instruments, check negotiability, letters of credit, securities and secured transactions. Other areas of the law are still controlled by common law. For example, common law still controls issues related to contracts for services and real estate, and courts look to the opinions of superior state courts as primary authority for these issues. The UCC was crafted largely from the common law rules of which the UCC framers largely approved. As a result, courts in Texas are known to apply the UCC to issues still controlled by the common law. Here are some examples:

“The two uniform acts upon which most twentieth century warranty cases are based (USA and UCC) essentially codified the common law of warranty…Thus, reference to the Code is instructive (for analyzing service contracts).” Bell v FDP 811 S.W. 2d 572 (Tex. 1991).

“We thus adopt the standard for conspicuousness contained in the Code for indemnity agreements and releases like those in this case that relieve a party in advance of responsibility for its own negligence.” Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 511 (Tex. 1993).

Your legal issue can be affected by whether the UCC or the common law applies. Issues such as contract formation, rejection of goods, remedies and contract modification are vastly different under the common law and the UCC. At times it can be advantageous to apply the UCC law to your common law issue, and at times it might not. An attorney well-versed in these issues can help determine the best legal argument for your issue. Case law is often the most practical way to determine how and why a legal issue might be controlled by the UCC or common law.