What Is Breach of Contract in Sales Under the UCC?

Contract law is one of the oldest and well-established areas of the legal system. In 1952, the National Conference of Commissioners on Uniform State Laws, together with the American Law Institute, promulgated the Uniform Commercial Code, or UCC, a statutory framework to govern contract principles in commercial settings. Article 2 of the UCC governs the sale of goods and sets forth rules regarding breach and remedies.

A breach of contract is any nonperformance or noncompliance with the stated, mutually understood and agreed to terms of a contract. In general, the UCC does not alter the common-law definition of breach. However, the UCC contains several provisions that address certain commercial issues, which give rise to circumstances that could amount to breach, even though the exact situation was not contemplated or memorialized in the terms of an agreement.

The UCC may imply certain standards into a contract (unless they are otherwise explicitly waived) that can give rise to a cause of action for breach. For example, section 2-314 covers the implied warranty of merchantability. Under this provision, it is implied that goods will be suitable and merchantable (defined specifically by the statute). Even if the contract fails to state what constitutes merchantability, a party could be in breach of contract if the goods in question do not meet the standards set forth in section 2-314.

While a breach is generally any noncomfority or nonperformance in a contract, the UCC may provide for “gap fillers,” if a contract fails to address them. The gap fillers may help a party avoid liability for a supposed breach. For example, section 2-308 covers the place for delivery if not stated in the contract. Under this provision, goods may be delivered to the seller’s place of business or his residence. Even if the parties orally agreed to delivery of the goods at the seller’s residence, but the contract was silent as to place of delivery and the buyer delivered the goods in question to the seller’s place of business, such conduct would not be a breach under this provision of the UCC.

The UCC is a very complicated and intricate statutory scheme covering contracts involving the sale of goods. A careful analysis of the facts at hand is required to address issues such as whether a breach has occurred, whether one party can “cure,” or correct, the breach and whether gap fillers or other special rules apply. Because cases can turn on the slightest change in a fact pattern, you should seek individual legal advice before proceeding.