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Friday, September 26, 2008

Good article on UCC and U.S. contracts

Supply chain managers and legal practitioners alike are surely mindful that the sale of goods is at the heart of every product or parts supply agreement. Such sales are governed in the U.S. not only by the parties' agreement (and perhaps industry custom and practice), but also by the Uniform Commercial Code (UCC) as adopted by each state.

The UCC has various rules that govern the relationship between buyers and sellers of goods, covering things such as contract formation and product delivery and acceptance requirements. Some of these rules are immutable, while others serve on an as-needed basis to fill any gaps in the parties' agreement. Most typically, I suspect that the UCC plays at best an unseen role in day-to-day supply negotiations. Hopefully, most parties (or their counsel) have a general grasp of the relevant UCC rules and are at least aware of potential pitfalls. Some of those issues are fair game for a future blog entry, but even UCC experts will want to take note of the article cited below.

Assume that one party to a supply arrangement is U.S.-based and the other is foreign. After some initial posturing, the U.S. buyer is feeling pretty good that the foreign seller is amenable to picking a U.S. jurisdiction, such as New York or Delaware, for the choice of law. The U.S. party may conclude (with relief) that the international legal issues are put to rest. Good call? Well, your opinion may change after reading this recent article.

Business Law Today recently featured an interesting - and somewhat surprising - analysis on the United Nations Convention on Contracts for the International Sale of Goods. It's worthwhile reading, particularly regarding how the Convention on Contracts relates to U.S. contracts.

The Convention on Contracts is the uniform international sales law governing a large percentage of worldwide trade. More than 70 nations, including the United States, have ratified the Convention.

-- Heather Mallard

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