# UCC Article 2 Key Provisions for Manufacturers and Buyers > Source: https://netray.co/tools/ucc-article-2-sale-of-goods-key-provisions-reference > Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems. > Section: Free Tools ## Short answer Searchable table of the UCC Article 2 sections that decide most US purchase order disputes, with the practical effect of each. ## Category compliance-legal ## Region United States ## Audience - Buyer - Contracts manager - Plant manager - Sales manager ## Tool **Kind:** worksheet **Mode:** reference **Columns:** #### UCC section **Key:** section **Type:** text #### Topic **Key:** topic **Type:** text #### What it says in practice **Key:** rule **Type:** text #### Why it matters in a PO or supply deal **Key:** why **Type:** text **Rows:** #### Scope **Section:** 2-102 **Rule:** Article 2 applies to transactions in goods, not services or real estate. **Why:** A mixed deal for machines plus installation may be argued under Article 2 or common law depending on the predominant purpose. #### Statute of frauds **Section:** 2-201 **Rule:** A contract for goods of $500 or more needs a writing signed by the party to be charged, with a quantity term. **Why:** A confirmed email or PO with a quantity is usually enough; a handshake on a large order is risky. #### Formation **Section:** 2-204 **Rule:** A contract can exist even if some terms are left open, if the parties intended to contract. **Why:** Shipping against a PO can form a contract before every term is agreed. #### Firm offers **Section:** 2-205 **Rule:** A merchant's signed written offer that promises to stay open is irrevocable for the stated time, up to 3 months, without consideration. **Why:** A signed quote that says it is valid for 60 days can bind the seller for that period. #### Acceptance **Section:** 2-206 **Rule:** An order to buy for prompt shipment can be accepted by prompt shipment or a prompt promise to ship. **Why:** Shipping the wrong goods can be both acceptance and breach. #### Battle of the forms **Section:** 2-207 **Rule:** Between merchants, additional terms in an acceptance become part of the contract unless the offer limits acceptance, they materially alter it, or the offeror objects. **Why:** Conflicting PO terms and acknowledgment terms often knock each other out; gap-fillers then apply. #### Modification **Section:** 2-209 **Rule:** A modification of a contract needs no new consideration; a signed writing can bar oral changes. **Why:** Price or date changes by email are enforceable; no-oral-modification clauses matter. #### Open price term **Section:** 2-305 **Rule:** If price is left open, a reasonable price at time of delivery applies, with good faith. **Why:** Blank-price releases against a blanket PO invite disputes. #### Output and requirements **Section:** 2-306 **Rule:** Quantities measured by output or requirements mean actual good-faith amounts, not unreasonably disproportionate to estimates. **Why:** Governs blanket orders and forecasts with no firm quantity. #### Termination notice **Section:** 2-309 **Rule:** Where the agreement has no fixed term, either party may terminate on reasonable notification. **Why:** Open-ended supply deals can end, but not instantly without notice. #### Warranty of title **Section:** 2-312 **Rule:** Seller warrants good title and that goods are free of liens; a merchant also warrants against infringement claims. **Why:** Relevant to used machinery and to parts that may infringe patents. #### Express warranty **Section:** 2-313 **Rule:** Affirmations of fact, descriptions, samples and models that are part of the basis of the bargain create express warranties. **Why:** Spec sheets, drawings and catalog claims can bind the seller. #### Implied warranty of merchantability **Section:** 2-314 **Rule:** A merchant seller impliedly warrants that goods pass without objection in the trade and are fit for ordinary purposes. **Why:** Applies by default unless properly disclaimed. #### Implied warranty of fitness **Section:** 2-315 **Rule:** If the seller knows the buyer's particular purpose and that the buyer relies on the seller's skill, goods must be fit for that purpose. **Why:** Stating the application in the RFQ helps the buyer here. #### Disclaimer of warranties **Section:** 2-316 **Rule:** Disclaiming merchantability must mention the word merchantability and, if written, be conspicuous; fitness disclaimers must be in a conspicuous writing. **Why:** Buried lowercase disclaimers often fail. #### FOB terms **Section:** 2-319 **Rule:** FOB place of shipment means the seller must ship and bear risk and expense to put goods on the carrier; FOB destination means seller delivers at destination. **Why:** Domestic shipping terms drive who bears transit loss. #### Passing of title **Section:** 2-401 **Rule:** Title passes as explicitly agreed; otherwise at the time and place the seller completes physical delivery. **Why:** Matters for liens, insurance and bankruptcy of a party. #### Manner of tender **Section:** 2-503 **Rule:** Tender requires the seller to put and hold conforming goods at the buyer's disposition and give notice reasonably needed. **Why:** Defines when the seller has performed. #### Risk of loss without breach **Section:** 2-509 **Rule:** With carrier shipment, risk passes on delivery to the carrier for shipment contracts, or at destination for destination contracts. **Why:** Pair with the insurance clause and Incoterms or FOB term used. #### Buyer's right to inspect **Section:** 2-513 **Rule:** The buyer has a right to inspect goods before payment or acceptance at a reasonable time and place. **Why:** Supports incoming inspection before paying on delivery terms. #### Perfect tender **Section:** 2-601 **Rule:** If goods or tender fail in any respect to conform, the buyer may reject all, accept all, or accept any commercial units and reject the rest. **Why:** Single-delivery contracts allow rejection for any nonconformity; installment contracts differ. #### Cure by seller **Section:** 2-508 **Rule:** If the time for performance has not expired, or the seller had reasonable grounds to believe the tender would be accepted, the seller may cure within the contract time or a further reasonable time. **Why:** Limits instant rejection; supports cure periods in quality agreements. #### Rejection procedure **Section:** 2-602 **Rule:** Rejection must occur within a reasonable time after delivery and the seller must be seasonably notified. **Why:** Late rejection can be treated as acceptance. #### Notice of breach after acceptance **Section:** 2-607 **Rule:** After acceptance, the buyer must notify the seller of breach within a reasonable time or be barred from any remedy. **Why:** A written defect notice is the single most important step for a buyer. #### Revocation of acceptance **Section:** 2-608 **Rule:** A buyer may revoke acceptance if a nonconformity substantially impairs value and acceptance was based on a reasonable assumption it would be cured or on difficulty of discovery. **Why:** Used for latent defects found after commissioning. #### Adequate assurance **Section:** 2-609 **Rule:** When reasonable grounds for insecurity arise, a party may demand adequate assurance of performance in writing and suspend its own performance meanwhile. **Why:** A tool for late deliveries and credit worries. #### Anticipatory repudiation **Section:** 2-610 **Rule:** If one party clearly repudiates future performance that would substantially impair value, the other may await performance for a commercially reasonable time or resort to remedies. **Why:** Relevant when a supplier signals it will not ship. #### Installment contracts **Section:** 2-612 **Rule:** The buyer may reject an installment only if the nonconformity substantially impairs its value and cannot be cured. **Why:** Contrasts with the perfect tender rule for single deliveries. #### Excuse by failure of presupposed conditions **Section:** 2-615 **Rule:** Delay or nondelivery is not breach if performance became impracticable due to an event the basic assumption of the contract was that it would not occur; the seller must allocate fairly and notify. **Why:** Force majeure clauses are usually drafted to be clearer than this default. #### Seller's remedies on buyer insolvency **Section:** 2-702 **Rule:** A seller discovering the buyer is insolvent may refuse delivery except for cash, and in limited cases reclaim goods received within 10 days. **Why:** Credit risk planning for customers in distress. #### Seller resale **Section:** 2-706 **Rule:** After the buyer's breach, the seller may resell the goods and recover the contract price minus resale price, plus incidental damages. **Why:** Standard remedy for custom stock a buyer refuses. #### Action for the price **Section:** 2-709 **Rule:** The seller may sue for the price of accepted goods, or goods the seller cannot reasonably resell, including custom goods identified to the contract. **Why:** Key for make-to-order parts built to a customer's drawing. #### Buyer's remedies **Section:** 2-711 **Rule:** On breach the buyer may cancel, recover price paid, and cover or recover damages for nondelivery. **Why:** Starting point for supplier failure claims. #### Cover **Section:** 2-712 **Rule:** The buyer may buy substitute goods in good faith and without unreasonable delay, and recover the difference in price plus incidental and consequential damages. **Why:** Document the replacement purchase quickly and keep quotes. #### Damages for accepted nonconforming goods **Section:** 2-714 **Rule:** Damages equal the difference between value as accepted and value as warranted, unless special circumstances show different damages. **Why:** Basis for a price reduction claim on accepted parts. #### Incidental and consequential damages **Section:** 2-715 **Rule:** Buyer may recover incidental damages and consequential losses the seller had reason to know of that could not be prevented by cover. **Why:** Line stoppage losses are consequential; caps and exclusions target this. #### Liquidated damages **Section:** 2-718 **Rule:** Damages may be liquidated in the agreement at an amount reasonable in light of anticipated or actual harm; an unreasonably large amount is void as a penalty. **Why:** Late delivery penalties must be tied to realistic loss. #### Limitation of remedies **Section:** 2-719 **Rule:** Parties may limit remedies to repair or replacement or exclude consequential damages unless the limitation is unconscionable; an exclusive remedy that fails of its essential purpose lets other remedies apply. **Why:** The statutory basis for liability caps and sole-remedy clauses. #### Statute of limitations **Section:** 2-725 **Rule:** An action for breach must start within 4 years after the cause accrued; parties may reduce it to not less than 1 year but not extend it. **Why:** Warranty claims generally accrue at tender of delivery unless the warranty explicitly extends to future performance. **Notes:** General US summary of the uniform text. Each state adopts its own version with local changes, and Louisiana differs. Check the governing law in your contract. A starting point, not legal advice. ## Content **Intro:** Most US purchase orders and supply agreements for physical goods sit on top of UCC Article 2, whether the parties wrote that down or not. This table lists the sections that come up in real disputes about conforming goods, warranties, rejection and damages. **Sections:** #### How to use this reference **Body:** Search for a topic such as cure, notice or warranty, then read the practical effect column before reading your own contract. Article 2 supplies default rules. Your agreement can change many of them, but a clause that tries to change a rule has to do it clearly. Where the table says a rule can be varied, that usually means your written terms win. Where it does not, as with the duty of good faith, the statute wins no matter what the contract says. **Bullets:** - Find the governing law clause first - Use the section number when talking to counsel - Check whether the deal is goods or services - Export the filtered rows into your negotiation notes #### The rules that cause the most disputes **Body:** Battle of the forms under 2-207 is the most common surprise: a buyer sends a PO with its terms, a seller replies with an acknowledgment and its own terms, and neither side noticed the conflict. Notice of breach under 2-607 is the most common buyer mistake: accepting goods, finding a defect later and never telling the seller in writing. Perfect tender under 2-601 and cure under 2-508 together explain why a quality agreement should say how rejections and replacements work. #### Where drafting changes the default **Body:** Warranty disclaimers, remedy limits, consequential damages exclusions, liquidated damages and shortened limitation periods are all permitted but constrained. Disclaimers must be conspicuous, remedies must not fail of their essential purpose, and liquidated damages must be reasonable. For manufacturers selling custom parts, 2-709 matters because it can allow a claim for the full price of goods that cannot be resold. #### Common mistakes **Body:** Do not treat this as a substitute for your state's enacted text or for counsel. Do not assume services are covered. Do not assume that a clause in your PO terms survived the acknowledgment. And do not forget international sales, where the CISG may apply instead of Article 2 unless the parties exclude it. **Cta:** If you want purchase order terms and supplier acknowledgments compared automatically against your standard terms inside your ERP, Netray can build a read-only review that flags conflicts for a person to decide. **Faq:** #### Does the UCC apply to services? **Answer:** No. Article 2 covers the sale of goods. Pure services follow common law, though a mixed contract may be treated under Article 2 if the sale of goods is the predominant purpose. Check the governing law for your jurisdiction. #### What is the battle of the forms? **Answer:** It is the situation where a buyer's PO and a seller's acknowledgment contain conflicting terms. Section 2-207 decides which terms become part of the contract, and conflicting terms are often dropped in favor of default rules. #### How long do I have to reject goods? **Answer:** Rejection must be made within a reasonable time after delivery, and the seller must be notified. What is reasonable depends on the goods and the trade, so state an inspection window in your contract. #### Is this table legal advice? **Answer:** No. It is a plain summary of the uniform text to help you prepare questions. States vary in their enacted versions, and facts matter. Use counsel for any dispute or high value contract. ## Search terms ucc article 2 summary, battle of the forms 2-207, ucc 2-314 implied warranty merchantability, ucc statute of frauds 500, ucc perfect tender rule, ucc 2-719 limitation of remedies, ucc sale of goods cheat sheet, ucc 2-725 statute of limitations --- Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json