Introduction to Commercial Law.

Commercial law is the body of law governing business and commercial transactions. [1] In the United States, the Uniform Commercial Code ("UCC") is indispensable to the discussion of commercial law. All 50 states have enacted some form of the UCC, even if they have made minor changes. The UCC's scope is wide. Article 1 contains general provisions. Article 2 deals with the sale of goods. Article 2A deals with leases. Article 3 deals with negotiable instruments (e.g., checks). Article 4 deals with banks and banking deposits. Article 5 deals with letters of credit. Article 6 deals with bulk transfers and bulk sales. Article 7 covers warehouse receipts, bills of lading and other documents of title. Article 8 deals with investment securities. Article 9 deals with secured transactions.

If one had to say that there is a "most commonly used" article of the UCC, it would likely be Article 2. As mentioned above, Article 2 deals with the sale of goods. For sales of services, the UCC does not apply. When transactions involve goods and services, there are different rules that may be applied, depending on the jurisdiction in which the case is being tried.

The majority approach is the "Predominant Purpose" test, where courts decide whether the predominant purpose of the transaction is to sell goods or services. If it is goods, then Article 2 applies. The UCC will apply to the whole transaction, even the services portion. If the predominant purpose is services, then Article 2 does not apply to any part of the transaction. [2]

Another common approach is the "Gravaman of the Action" test. Under this test, the inquiry is whether the source of the complaint is with the goods or services portion of the transaction. If the source of the complaint lies with the goods, then Article 2 applies even if the predominant purpose of the transaction is services rather than goods. If the source of the complaint lies with the services, then Article 2 does not apply even if the predominant purpose of the transaction is goods rather than services. [2]

Outside the United States, the Convention on Contracts for the International Sale of Goods ("CISG") is indispensable to the discussion of commercial law. Its scope is the same as the scope of Article 2 in the U.S. As of August 2010, the CISG had been ratified by 77 countries, including the United States. [3] The CISG applies when there is a sale of goods between contracting states to the CISG, or when the rules of private international law lead to the application of the law of a contracting state to the CISG.

It is also important to note that parties to a contract can often provide for rules differing from those of the UCC and CISG. Very generally, parties of equal bargaining power can vary the terms of the UCC and CISG. If two large businesses contract for a transaction in goods, a general rule is that the parties can input contractual provisions to modify the UCC or CISG. However, if a transaction in goods is between two parties of unequal bargaining power (sometimes the difference in bargaining power must be profound), then generally the UCC or CISG cannot be modified through contracting. Please note that the point of the general rule is that it does not necessarily hold throughout its sphere of application.

Identifying the major players in commercial law is only the tip of the iceberg. It will take many more posts to reveal more of that hypothetical iceberg.

Citations:
[1] Wikipedia, Commercial Law, http://en.wikipedia.org/wiki/Commercial_law (last visited May 23, 2012).
[2] Lynn M. LoPucki, Elizabeth Warren, Daniel Keating, Ronald J. Mann, Commercial Transactions: A Systems Approach, 12 (Aspen Publishers 4th ed. 2009).
[3] Wikipedia, United Nations Convention on Contracts for the International Sale of Goods, http://en.wikipedia.org/wiki/United_Nations_Convention_on_Contracts_for_the_International_Sale_of_Goods (last visited May 23, 2012).