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The UCC and Retail: How the Law Applies

By Deanne Katz, Esq. | Last updated on

Retail businesses, or really any companies that engage in the buying or selling of commercial goods, are subject to a piece of law called the UCC. If you've never heard of it before, now is the time to keep reading.

While state legal systems don't differ too dramatically, when it comes to details there are often surprises if you're not familiar with a state's legal codes.

The UCC, or Uniform Commercial Code, aimed to solve that by standardizing the laws regarding the sale of goods across the country. So does the UCC apply to you?

Are You a Merchant?

For the most part, if your company buys or sells physical property (as opposed to real estate), then the UCC applies.

The code was created by the American Bar Association, but at this point it's been adopted by most states. The only remaining hold-out is Louisiana, which has only adopted portions of the code.

While the law applies to the sale and purchase of goods, what it really applies to is any purchase or sale when at least one party to the transaction is a merchant.

Who's considered a "merchant"? Any seller who regularly sells similar items, or any buyer who regularly buys similar items, is a merchant under the UCC. So if your business regularly buys or sells certain items, you're considered a merchant and the purchase or sale is regulated by the UCC.

Practical Considerations

In practical terms, that may not have a big impact on your day-to-day business. After all, you're likely running your retail operation in a fairly standard way, charging customers a price, taking money, making change, and providing a receipt.

Where the provisions truly kick in is for big purchases. The UCC mandates that any sale of goods over $500 must be made in writing. That's to protect both the buyer and the seller in case a dispute comes up.

For business owners, that means the contract of sale should include every important term, including any warranties or disclaimers.

To ensure that a big sale won't come back to haunt you, it's good to talk to your lawyer about what provisions should be included in a standard bill of sale for such a large item. From there, you should be able to tailor the standard terms to any purchase.

In this case, a little knowledge can go a long way. But for the UCC and other laws that bind your business, it's always better to know than to be left in the dark.

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