UCC vs Common Law Contracts

Last updated on July 29, 2023

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The Uniform Commercial Code and common law are both governing principles set in charge of contract law. Although they are similar in many ways, UCC and common law contracts are not similar in many ways. It’s vital to be able to tell the difference.

Several significant items set UCC contracts apart from common law contracts. They include contract modification, promise to keep a contract open, time to sue, acceptance of an offer with different terms, and more. They are far from the same thing.

If you’re curious about UCC versus common law contracts, you’ve come to the right place. Read on to learn more about the differences between the two, what they are, the overall flexibility of the UCC versus the common law, and other critical information. The more you know, the better prepared you will be when facing either of these items.

UCC Vs. Common Law Contracts

If you operate in business contracts, chances are you’ve heard of a UCC or common law contract. Each covers a different aspect of a business deal based on the tangible or intangible items involved between the two parties.

Let’s dive into these governing principles, then talk more about the massive differences between the two. They each have valuable purposes in the professional world, but it’s not always easy to tell what serves what in a contractual situation. UCC and common law are not the same thing.

What Is The UCC?

The UCC, also known as the Uniform Commercial Code, was an attempt to create a standardized set of laws across the United States. Movable goods and sales are covered by the UCC, as are the rights of the buyer. They are meant to simplify the process and ensure buyers and sellers have more rights.

UCC applies to a contract if your contract has to do with contractual transactions involving tangible objects and other goods. They will work with your legal documentation if you are handling a physical object or objects and moving them from one place to another.

The UCC is made for commercial transactions across state lines when considering physical goods and tangible objects. The common law comes into play in different contracts.

What Is Common Law?

The common law covers everything the UCC does not cover under its statutes. It’s more inclined to protect items like real estate and intellectual things rather than a good or product.

Here are a few items a common law contract might cover on the market:

• Copyrights
• Software
• Land sales
• Patents
• Professional work
• Personal services
• Constructions work

They focus on intellectual property more than tangible items.

If you’re dealing with a large shipment of goods, you are most likely working with a UCC contract. However, if you are attempting to deal with a transaction involving a patent, common law is more likely to step into play.

There are other vital differences to consider between the two. Let’s dive into these significant details next.

Major Differences Between The Two

The UCC and common law exist for the purpose of fair contracts. However, there are some significant differences between the two that are helpful to understand in case you find yourself involved with either variety for your business transactions.

Here are some significant differences between the two:

• __Promise to allow an offer to remain open: __This promise is an option contract in common law. In a UCC, it’s a firm offer and needs writing.
• __Terms: __Common law needs writing about the price, quantity, performance time, identity of offer, and nature of work. UCC needs a quantity as a must.
• __Statute of limitations: __These will differ based on the state where they come to pass.
• __Different terms with acceptance of an offer: __Common law says a shift to an offer is a rejection. UCC says it can still be a binding contract in the correct circumstances.
• __Contract modification: __In common law, modifications need consideration. In UCC, changes do not need consideration as a prerequisite.

These are helpful to keep in mind for business intent with legal contracts.

These differences impact the protections and benefits you receive from common law and UCC contracts. One is not necessarily better than the other - they are just different.

Is The UCC More Flexible Than the Common Law?

In contract formation, the UCC provides more flexibility than the common law format of the contract. Thanks to this ability to maneuver easily, it’s a more practical solution for real businesses because it allows them to account for situations that may only come up in one or two companies.

Many requirements to form a common law contract are frustrating and cumbersome for smaller merchants. Rather than deal with the struggles of these requirements, they choose to operate within the bounds of the UCC instead. It allows much more room than the common law standards.

The UCC is always more flexible than the common law in application. It’s helpful to have this tool in the back of your belt for potential future consideration.

Does UCC Trump Common Law?

In almost every state, UCC trumps common law. Most states have adopted statutes, except Louisiana with Article 2, so it typically goes over the common law. However, it’s also critical to note that the UCC and common law serve and cover varying items, making them each valuable. One is strong where the other is weak, and vice versa.

For instance, the UCC doesn’t cover transactions with real estate, employment, and services. In this case, common law helps bring contracts to life for these situations.

UCC covers personal property, but it does not secure real property. There are times for a UCC contract to step forward as the ideal option and moments when a common law contract is the better selection.

It’s also vital to note that every state may vary slightly in taking on the UCC. It isn’t exactly the same in every location.

Reference Legal Explanations

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