Adherence to the Uniform Commercial Code

All Florida retailers should be aware of the Uniform Commercial Code (UCC). The UCC is a model law adopted by the legislatures of all 50 states and is designed to harmonize the rules governing certain commercial transactions. Where applicable, the UCC displaces traditional state common law.

As adopted in Florida, Article II of the UCC only applies to “transactions in goods.” That is to say, it does not apply to the sale of services of any kind. Contracts for services are still governed by Florida common law.

Allied Shelving & Equipment, Inc. v. National Deli, LLC

Sometimes it can be tricky to determine whether a given contract falls under the UCC or common law. Here is a recent example from a Florida District Court of Appeal decision. In this case, a food manufacturer, National Deli, hired Allied Shelving to install a set of large warehouse shelves. The agreement went south, and each party sued the other for breach of contract.

A trial court ruled in favor of National Deli. The court applied common law, rather than the UCC, in interpreting the underlying contract. Allied appealed, arguing the UCC should have applied.

The Florida Third District Court of Appeal upheld the trial court’s decision. Judge Leslie B. Rothenberg, writing for a three-judge panel, said this contract was “primarily” one for services rather than goods. Therefore, the trial court was correct in applying common law instead of the UCC.

“Many contracts, commonly referred to ‘hybrids,’ involve transactions for both goods and services,” Judge Rothenberg said in her opinion. When dealing with a hybrid contract, a court must decide whether it is “predominantly” one for goods or services. For example, if you buy a couch and have it delivered to your house, that is predominantly a contract for a good (the couch) rather than a service (the delivery).

In this case, the trial court decided the services portion of the contract—the installation of the shelving—was the predominant factor over the goods sold. Unfortunately, the appeals court did not have a fully developed record, including the contract itself, and therefore Judge Rothenberg said she was in no position to second-guess the trial court’s finding on this issue.

Getting Help Understanding the Law

It is always important to understand what law applies to a given business contract. The UCC and common law treat contracts and business negotiations quite differently. For instance, a contract for goods under the UCC can be slightly modified without destroying the agreement. In contrast, any change to an offer constitutes a rejection and submission of a new offer. These distinctions can prove important if there is a subsequent breach of contract and litigation follows.

If you need advice on the UCC or any other aspects of business contracts, contact Naples business attorney John S. Sarrett today.

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