Your Legal Rights in UCC Disputes

The Uniform Commercial Code (UCC) is a collection of statutes that regulates many business and contract matters. Created by a couple of nongovernmental legal organizations, the UCC provides a framework to make these activities more predictable and efficient in order to permit their continued expansion. While the UCC has no legal force, each state has adopted versions of the UCC that are laws; in the Lone Star State, the laws are known as the Texas Business and Commerce Code.

If you find yourself in a dispute over the sale of goods or a breach of warranty, you may be able to pursue litigation with the help of an experienced lawyer.

What Does UCC Cover?

Under the UCC, “goods” that are covered must be “moveable.” This includes natural resources such as crops, lumber and coal and man-made items like televisions, cars and cellphones.

Below is a list of what the UCC covers:

• Sales of goods
• Leases of goods
• Bank deposits and collections
• Negotiable instruments (checks)
• Bulk sales laws
• Documents of title
• Secured transactions
• Investment securities

Note: Services, land, real estate and goods attached to the ground (minus crops) are not covered by the UCC.

UCC Dispute Example

Let’s say you own a business that creates high-powered graphics processing units (GPUs) for virtual reality headsets. You receive an order for 1,000 specialized GPUs from a manufacturer and ship them all out a few months later. A few days after shipment, the manufacturer calls you after receiving the GPUs claiming they only need half the units. They want to send the units back and only pay for 500 of them, even though the contract you both agreed on was for the full amount.

Now you’re stuck with 500 GPUs you cannot sell to another manufacturer because they are a special order. In this case, your goods may be covered by Article 2 of the UCC, which deals with the sale of goods.

Common Contract Terms

One of the biggest deciding factors as to whether litigation is the way to go is the common terms in your contract. Unlike most contracts, a sale of goods contract does not need to specify the exact terms and conditions, which may or may not hurt your case.

Here are a few of the terms that may be left open in your sales of good contract:

• Price: The cost of buying or selling the goods
• Payment: When, where and how the payment is made
• Delivery: When and where the delivery is made
• Quantity: Minimum or maximum (if applicable) of how much is bought or sold

It’s important your sale of goods contract is detailed. It may all come down to ambiguity in court as to whether or not you are successful in your dispute.

Your Legal Rights in a UCC Dispute

Litigation can be a costly and lengthy endeavor. That’s why you’ll want an experienced lawyer on your side to hold the other party accountable. You may be able to recover losses you have suffered due to a dispute.

The Dallas business litigation attorneys at Lyons & Simmons, LLP have experience handling disputes over the formation and interpretation of contracts, breaches of warranties, and many other issues the UCC may be applied to. Regardless of your situation, we can help with your business and commercial legal matters.