The Uniform Commercial Code (UCC) and the Common Law of Contracts are two legal systems that govern business transactions in the United States. Although they are distinct systems, they are also closely related, and understanding their relationship is important for anybody working in business or the legal field.
The UCC is a set of laws that have been adopted by all 50 states in the US. It governs commercial transactions, including the sale of goods, leases, and secured transactions such as loans or mortgages. The UCC is designed to provide a uniform set of rules and regulations that govern these transactions, making it easier for businesses to operate in multiple states.
On the other hand, the Common Law of Contracts is a system of laws that has developed over time through the rulings of judges in various court cases. This system governs contracts that are not covered by the UCC, such as contracts for services, employment agreements, and real estate contracts. The Common Law of Contracts is based on the principle of freedom of contract, which means that individuals and businesses are free to make whatever agreements they choose, as long as those agreements do not violate any laws or public policy.
Despite their differences, the UCC and the Common Law of Contracts are closely related. In fact, the UCC incorporates many principles of the Common Law of Contracts, including the requirement for mutual assent, consideration, and legality of purpose. For example, the UCC requires that contracts for the sale of goods be in writing if they are worth more than $500. This requirement is based on a common law principle called the Statute of Frauds, which requires certain contracts to be in writing to be enforceable.
Furthermore, if a contract is governed by both the UCC and the Common Law of Contracts, the UCC will take precedence. For example, if a contract for the sale of goods contains language that conflicts with the UCC, the UCC will prevail. This is because the UCC is considered a more specific set of laws that is designed to govern commercial transactions, while the Common Law of Contracts is a more general set of laws that applies to a range of different types of contracts.
In conclusion, the relationship between the UCC and the Common Law of Contracts is complex but important. Both systems of law govern different types of contracts and transactions, but they also overlap in many areas. Understanding the relationship between these two legal systems is essential for anybody working in business or the legal field, as it can help to ensure that contracts are properly drafted, negotiated, and enforced.