The Uniform Commercial Code (UCC)

Contract law controls most agreements between parties, whether oral or written, that involve goods, services, money, employment contracts and real estate deals. In order for a contract to be valid, there must be a few elements that are satisfied. There must be a negotiation, an agreement which consists of an offer and acceptance of the offer, consideration, capacity, and legality. The sources of law that governs contracts today consist of two bodies of law, Article 2 of the Uniform Commercial Code, also known as the UCC, and the common law of contracts. Determining what body of law applies to a contract dispute is an important first step in analyzing that problem. The Uniform Commercial Code, or UCC, is a statutory law that was adopted in every

state, except Louisiana which has adopted parts of the Code. The common law of contracts is a court-made law which is in a constant state of evolution. UCC is a body of law that governs the sale of a good such as a book or car, on the other hand, the common law is the body of law in which governs contracts for the sale of real estate, services, and intangibles. The most significant difference between the two bodies that govern contract law is in the acceptance of a contract, an essential element of any contract.
The Uniform Commercial Code or UCC was created by the American Law Institute and the National Conference of Commissioners on Uniform State Laws. The drafters of the Code had multiple purposes in mind, but the most obvious of which was to set up a uniform set of rules to govern commercial transactions, which are often conducted across state lines. The UCC contains nine articles which consist of (LII, 2012):
1. U.C.C. – Article 1 – General Provisions
2. U.C.C. – Article 2 – Sales
3. U.C.C. – Article 2A – Leases
4. U.C.C. – Article 3 – Negotiable Instruments
5. U.C.C. – Article 4 – Bank Deposits and Collections
6. U.C.C. – Article 4A – Funds Transfer
7. U.C.C. – Article 5 – Letters of Credit
8. U.C.C. – Article 6 – Bulk Sales
9. U.C.C. – Article 7 – Documents of Title
10. U.C.C. – Article 8 – Investment Securities
11. U.C.C. – Article 9 – Secured Transactions
The articles of the UCC that will be discussed in this comparison of the Uniform Commercial Code and the Common Law will be Article 2 – Sales and Article 2A – Leases.

Article 2 expressly applies only to contracts for the sale of goods [UCC, 2-102]. The essence of the definition of goods in the UCC [UCC, 1-105] is that goods are tangible, movable personal property. (Mallor, 2016, p. 326) In relation, contracts for the sale of such items as motor vehicles, books, appliances, computers, software's, and clothing, are covered by the UCC Article 2. The scope of Article 2A states this Article applies to any transaction, regardless of form, that creates a lease. [UCC, 2A-102] Contracts that discuss the lease of a car, equipment, or property fall under the UCC Article 2A. Article 2 was written so that the transactions between businesses would be more elastic than the mirror image rule, in common law, to allow flexibility making contract formation easier to

facilitate.
Common law contracts require strict adherence to the mirror image rule, while the UCC allows for minor changes to a contract that do not significantly affect its terms. Common law is a precedent set by prior court rulings. Common law uses the "Mirror Image" rule which means that the acceptance must be for the exact same terms and conditions presented in the offer. (Mallor, 2016, p. 363) Nothing can change, or the offer is no longer valid. The UCC is a bit less restrictive when it comes to this rule and allows terms to change if both parties accept the updated terms and come to an agreement. The old contract stands if the UCC is applied, while in common law, any changes made would void the contract. We can look at this rule in the case of Pride v. Lewis, 179 S.W.3d 375 (Mo. Ct. App. 2005).
Pride v.

Lewis is a case in which the mirror image rule is applied and gives an example of common law governing a contract. The Prides owned a house located in Nodaway County. They listed their house for sale when they moved to a farm and found a tenant to rent the house until it sold. They received an offer from Lewis to purchase the house for $55,000. The initial offer from Lewis was rejected. The Prides realtor presented them with the second contract, already signed by Lewis and his realtor. This contract that was signed by Lewis on April 9, 2003, which stated a closing date of May 15, 2003. The Prides had changed the date, by hand, to June 1, 2003, and signed the contract on April 9, 2003. The Prides and their realtor initialed the change however Lewis did not. On the day of closing, Lewis nor his realtor had appeared. When the closing did not occur, the Prides sent him a letter letting him know of his default and relisted the house with a realtor. The house sold for $40,000 in June 2004 and they were unable to find a tenant for that entire year. The Prides sued for breach of contract, seeking the damages for the difference between the $55,000 and the $40,000 it sold for. The trial court entered judgment in favor of the Prides, however, Lewis appealed. The appellate court Judge, Judge Presiding Ulrich states, "A contract does not exist without a definite offer and a ‘mirror-image' acceptance. Any acceptance that includes new or variant terms for the offer presented

amounts to a counteroffer and a rejection of the original offer." Pride v. Lewis, 179 S.W.3d 375 (Mo. Ct. App. 2005).
In this common law contract case, the fact that the Prides crossed out the closing date and changed it to June 1, makes this contract void since it is not a mirror image of the original agreement. As mentioned before, the sale of real estate falls under common law and therefore and agreement made must have the mirror image element. If the Prides had not crossed out the closing date and changed it, then Lewis would have had to pay the damages since the original agreement was there and a contract had been made, however, since they did they do not have a legal binding contract with Lewis.
A case in which we can see the UCC being applied is Audio Visual Artistry (AVA) v. Tanzer, 403 S.W. 3d 789 (Tenn. App. 2012), the UCC was applied because the contract between AVA and Tanzer had most of an equipment sale which amounted to 82% of the final contract price. In this case, Tanzer and AVA came into a contract for AVA to install home automation equipment into Tanzer's home. When the contract was being written, Tanzer had mentioned that if any other needs and desires occurred during the install of the home automation, AVA would accommodate them and that the contract price would be increased if AVA took on more work. The parties became involved in disputes over what was to be done, over the amounts of adjustments to the contract price, and over the quality of AVA's work. Tanzer fired AVA and hired another firm to complete the work. AVA then sued Tanzer for breach of contract. The trial court's decision, in this case, was in favor of AVA applying remedies rules and other provisions set forth in the UCC but allowing a partial offset in recognition that Tanzer's claim has some merit as well, the court entered judgment in AVA's favor for $36,580. Tanzer appealed to the Tennessee Court of Appeals, arguing that the trial court erred in applying the UCC instead of the common law. The Tennessee Court of Appeals then explains that the four Pass factors favor the trial courts conclusion that the instant contract was for the sale of goods. The Court of Appeals affirms the trial court's decision.
In the case mentioned above the courts used both contract law bodies to decide an outcome for this case. This case had a contract between the parties known as a Hybrid Contract. Many contracts involve a hybrid of both goods and services. As mentioned in the case, courts decide whether Article 2 applies to such a contract by asking which aspect, goods or service, predominates in the contract. The sale of the equipment dominated the contract in consideration as well as the agreements major purpose which was to have a sale of goods.
In conclusion, the key differences between the two bodies of law that govern contracts are that the UCC involves the sale of goods, contracts that involve commercial transactions. In common law, the contracts involve the sale of real property, service, and any intangibles. Another difference is if there is a contract being governed by the common law any changes made to it would void it, therefore the contract must have the original agreement this element is known as the mirror image rule. For UCC, you may change the terms of the contract as long as both parties accept the new terms. The UCC is more flexible and provides a faster commerce. The Uniform Commercial Code does require that whatever promises each party makes are fulfilled but does not contain strict terms as the common law.