Uniform Commercial Code – Article 2 (Sales)

Memorandum

To: Commission From: John JA Burke Date: 12 June 2004 Re: Amended Article 2 (Sales)

This memorandum continues the study by the New Jersey Law Revision Commission of Amended Article 2 (Sales) promulgated by the National Conference of Commissioners on Uniform State Laws and the American Law Institute. A previous memorandum submitted to the Commission described the reasons for the amendments and identified the package of Uniform Commercial Code products promulgated for consideration by the states: Revised Article 1, Amended Article 2 (Sales), Amended Article 2A (Leases), Amended Article 3 (Negotiable Instruments), Amended Article 4 (Bank Deposits and Collections), and Revised Article 7 (Documents of Title).1

Attached is a Table of Dispositions identifying differences between the 2003 Official Text of Amended Article 2 (Sales) and existing New Jersey Article 2 codified at 12A:2-101 et seq. The table consists of three columns: (1) the section number and caption of the 2003 Official Text of Amended Article 2, (2) the section number and caption of New Jersey law, and (3) a short description of the difference. A major change is indicated by the use of the italicized term “major change.” Use of that term does not place any value judgment on the effect it would have if adopted in New Jersey.

In general, Amended Article 2 (Sales) is not a revolution in sales law. The most significant changes are: (1) the definitions, substantially more terms are defined, in large part to accommodate electronic contracting, and the term “goods” expressly excludes “information”; (2) the provisions for electronic contracting; and (3) the statute of limitations for sales contracts. Other changes, of which there are many, do not have the character of novelty, but rather provide clarifications to delete obsolete language (e.g. outdated trade terms), or update the language of existing text to reflect case law development or provide better clarity of expression. However, any change to existing text is likely to create questions of interpretation requiring judicial resolution and the introduction of new concepts and terms is likely to generate a variety of opinion on the appeal of Amended Article 2.

New Jersey law contains several non-uniform amendments, the most significant being the “Artworks Consignment Act” found at 12A:2-329 through 2-336 for which there is no corresponding set of rules in the former or amended text of Article 2.

The Table of Dispositions is intended to serve as a platform of discussion at the June 2004 meeting and to provide a basis for the Commission’s decisions regarding its recommendation to the Legislature. A detailed narrative report will follow. A survey of the NCCUSL web site has revealed that no state has introduced legislation to adopt Amended Article 2.

1 While NCCUSL data show that no state has introduced Amended Article 2, the NCCUSL/ALI products garnering the most attention in state legislatures are: Revised Article, 1, Amended Articles 3 and 4 and Revised Article 7. As previously indicated, the drafters integrated and coordinated provisions among the package of revisions. Ideally, states would benefit, in terms of coherent jurisprudence, by adopting the revisions as an integrated whole, though this may not be feasible politically.

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 1 /ucc2/ucc2M061404.doc Uniform Commercial Code – Article 2 (Sales)

Table of Dispositions, Current New Jersey Article 2 to Amended Article 2 (2003 Official Text)

Current Article 2 Amended Article 2 Extent of Change

Part 1. Short Title, General Construction and Subject Matter

2-101. Short Title 12A:2-101. Short Title No change 2-102. Scope; Certain 12A:102 Scope; Certain No change Security and other Security and other Transactions Excluded Transactions Excluded From This Article From This Chapter 2-103. Definitions and 12A:2-103 . Definitions Major change, particularly Index of definitions and Index of definitions as to “goods” where information explicitly is excluded; also adds terms mainly to account for electronic transactions2 2-104. Definitions: 12A:2-104. Definitions: Mainly style changes to “Merchant”; “Between “Merchant”; “Between language Merchants”; Financing Merchants”; Financing Agency Agency 2-105. Definitions: 12A:2-105. Definitions: New Jersey statute Transferability; “Goods”; Transferability; “Goods”; contains former definition “Future” Goods; “Lot”; “Future” Goods; “Lot”; of “goods” containing no “Commercial Unit” “Commercial Unit” reference to information, and money in which the price is to be paid 2-106. Definitions: 12A:2-106. Definitions: No change “Contract”; “Agreement”; “Contract”; “Agreement”; “Contract for Sale”; “Contract for Sale”; “Sale”; “Present Sale”; “Sale”; “Present Sale”; “Conforming” to Contract; “Conforming” to Contract; “Termination”; “Termination”; “Cancellation” “Cancellation” 2-107. Goods to be 12A:2-107. Goods to be No change 2 “ Goods” specifically excludes “information.” However, neither amended Article 2 nor Revised Article 1 defines the term “information.” New Jersey law contains a definition of “information” in its adoption of the Uniform Electronic Transactions Act: “data, text, images, sounds, codes, computer programs, software, databases, or the like.” The Official Comment to §2-103 provides, “this article does not directly apply to an electronic transfer of information, such as the transaction in Specht v. Netscape, 150 F. Supp. 2d 585 (S.D.N.Y. 2001), aff’d, 306 F. 3d 17 (2nd Cir. 2002) [holding that mandatory arbitration clauses in Netscape license agreements were unenforceable because the persons downloading the software were not bound by inconspicuous contractual provisions contained in documents whose contractual nature was not obvious]. The decision in Specht was not based on Article 2, but rather on California common law contract principles and the Restatement (Second) of contracts. Hence the reference in the Official Comment to Specht merely illustrates the genre of transaction outside the scope of the definition of “goods.” Nothing in the text or article forbids argument by analogy where appropriate. Since it was never clear whether information was included within existing Article 2, thereby giving rise to the ill-fated UCITA, the change in definition is a clarification but does not reverse established positive law.

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 2 /ucc2/ucc2M061404.doc Severed from Realty: Severed from Realty: Recording Recording 2-108. Transactions [New] Major change; follows Subject to Other Law format of 2A:104(1) specifying other applicable law, e.g. federal law, certificates of title, consumer law; also provides that Article 2 modifies, limits and supersedes the Electronic Signatures in Global and National Commerce Act3

Part 2. Form, Formation, Terms and Readjustment of Contract; Electronic Contracting

2-201. Formal 12A:2-201. Formal Major change, price at Requirements; Statute of Requirements; Statute of which written record is Frauds Frauds required increased to $5000 from $500; term “writing” replaced with “record” and new section (4) providing for enforcement of contract not capable of being performed within one year of its making 2-202. Final Written 12A:2-202. Final Written Change but in substance Expression In a Record: Expression: Parol or not major; cross-references Parol or Extrinsic Extrinsic Evidence reflect Revised Article 1 Evidence 2-203. Seals Inoperative 12A:2-203. Seals Term “writing” replaced Inoperative with “record” 2-204. Formation in 12A:2-204. Formation in Major change, provides General General for contracting between electronic agents and between individuals and electronic agents 2-205. Firm Offers 12A:2-205 Firm Offers Style change 2-206. Offer and 12A:2-206. Offer and Major change, providing Acceptance in Formation Acceptance in Formation that contract may be of Contract of Contract formed if the acceptance contains additional or terms different from offer if acceptance is definite;

3 Subsection (4) takes advantage of a provision of ESIGN permitting states to modify that Act provided the modification is consistent with Title I and II of ESIGN and does not give special legal effect to particular technologies. Amended Article 2 does not supersede the provisions on disclosures for consumer transactions and provisions excepting certain types of notices from the provision of ESIGN. In appropriate situations, the Convention on Contracts for the International Sales of Goods (CISG) also would displace the UCC. The drafting process involved consultation of the CISG to determine whether it would be appropriate to track that law; this tack ultimately was rejected, but the CISG, arguably a much more simple text [though more limited in scope], influenced the drafting of Amended Article 2.

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 3 /ucc2/ucc2M061404.doc new subsection (3) 2-207. Additional Terms 12A:2-207. Additional Major change, section now in Acceptance or Terms of Terms in Acceptance or limited to saying that only Contract; Effect of Confirmation terms contained in offer Confirmation and acceptance that agree constitute contract; section applies to all contracts; does not address issues of offer and acceptance4 2-208. Course of 12A:2-208. Course of Major change, entire Performance on Practical Performance on Practical section deleted since that Construction. Reserved. Construction section is moved to Revised Article 1 2-209. Modification; 12A:2-208. Modification; No major change; Rescission and Waiver Rescission and waiver conforming language changes, e.g. “record” 2-210. Delegation of 12A:2-210. Delegation of Major change, conforming Performance; Assignment Performance; Assignment to Revised Article 9 and of Rights of Rights containing all new language 2-211. Legal Recognition [New] Major change, conforming of Electronic Contracts, Article 2 with UETA Records, Signatures (adopted in NJ) recognizing the validity of contracts in electronic form 2-212. Attribution [New] Major change, conforming Article 2 with UETA dealing with signature or record in electronic environment and attributing it to act of a person 2-213. Electronic [New] Major change, conforming Communication Article 2 to UETA and deeming receipt in electronic environment does not depend on individual’s awareness; does not deal with quality of content or the questions of where or when a communication is received

Part 3. General Obligation and Construction of Contract

4 Professor Rusch has stated, “Perhaps the most dramatic revision in the amendments to Article 2 is the revision of section 2-207” [referring to the prior rules on the “battle of the forms”]. Linda J. Rusch, Is the Saga of the Uniform Commercial Code Article 2 Revisions Over? A Brief Look at What NCCUSL Finally Approved, 6 Del. L. Rev. 41, 56 (2003). Revised Article 2-207 is a global section dealing with the terms of a contract in all cases; it eschews the mirror image rule and settles on the rule that a definite acceptance containing terms different from or additional to those of the offer may operate as an acceptance. In such situation, the exact terms of the contract are left to the “wise discretion” of the courts.

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 4 /ucc2/ucc2M061404.doc 2-301. General Obligation 12A:2-301. General No change of Parties Obligation of Parties 2-302. Unconscionable 12A:2-302 Word “clause” replaced Contract or Clause Term Unconscionable Contract with “term” or Clause 2-303. Allocation or 12A:2-303 Allocation or No change Division of Risks Division of Risks 2-304. Price Payable in 12A:2-304. Price Payable Change only in language, Money, Goods, Realty, or in Money, Goods, Realty, style no substance Otherwise or Otherwise 2-305. Open Price term 12A:2-305. Open Price No change; parties can Term conclude contract without price term 2-306. Output, 12A:2-306. Output, No change Requirements and Requirements and Exclusive Dealings Exclusive Dealings 2-307. Delivery in Single 12A:2-307. Delivery in No change Lot or Several Lots Single Lot or Several Lots 2-308. Absence of 12A:2-308. Absence of Style change only Specified Place for Specified Place for Delivery Delivery 2-309. Absence of Specific 12A:2-309. Absence of Adds sentence to Time Provisions; Notice of Specific Time Provisions; subsection (3) saying term Termination Notice of Termination specifying standard for nature and timing of notice is enforceable if not unreasonable; can be no notice (party autonomy) 2-310. Open Time for 12A:2-310. Open Time for Amended to make style Payment or Running of Payment or Running of changes and to provide for Credit; Authority to Ship Credit; Authority to Ship delivery of electronic under Reservation under Reservation documents 2-311. Options and 12A:2-311. Options and Style changes only Cooperation Respecting Cooperation Respecting Performance Performance 2-312. Warranty of Title 12A:2-312. Warranty of Major change, expanding and Against Infringement; Title and Against warranty of title to include Buyer’s Obligation against Infringement; Buyer’s a transfer that does not Infringement Obligation against unreasonably expose buyer Infringement to litigation; changes to disclaimer to cover warranty of title and warranty against infringement 2-313. Express warranties 12A:2-313. Express Major change, introducing by Affirmation, Promise, warranties by Affirmation, concept of remedial Description, Sample; Promise, Description, promise (new term defined Remedial Promise Sample in 2-103) and clarifies that express warranties are made to “immediate buyer” from seller

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 5 /ucc2/ucc2M061404.doc 2-313A. Obligation to [New] Major change, introducing Remote Purchaser Created “pass through warranties” by record Packaged with to remote purchases where or Accompanying Goods record is contained in package with new goods 2-313B. Obligation to [New] Major change, dealing Remote Purchaser Created with obligations to remote by Communication to the purchaser resulting from Public advertisement or similar communication 12A:2-313.1. Consumer NJ non-uniform goods product; warranties amendment of 90 days or less; computation of time 12A:2-313.2. Consumer NJ non-uniform goods product; defined amendment 2-314. Implied Warranty: 12A:2-314. Implied Style change only, but Merchantability; Usage of Warranty: Official Comment Trade Merchantability; Usage of substantially revised Trade 2-315. Implied warranty: 12A:2-315. Implied No change fitness for Particular warranty: fitness for Purpose Particular Purpose 2-316. Exclusion or 12A:2-316. Exclusion or Three changes, spelling Modification of Modification of out how to disclaim Warranties Warranties warranties in consumer contracts 2-317. Cumulation and 12A:2-317. Cumulation No change Conflict of Warranties and Conflict of Warranties Express or Implied Express or Implied 2:318. Third Party Third- 12A:2-318. Third Party Major change to caption Party Beneficiaries of Beneficiaries of and text, dealing with Warranties Express or Warranties Express or extension of warranties Implied and Obligations Implied and providing for alternative provisions 2-319. F.O.B. and F.A.S. 12A:2-319. F.O.B. and Major change, deleting use Terms Reserved F.A.S. Terms of trade terms fob and fas [note all terms in this and following sections are outdated, replaced by Incoterms 2000] 2-320. C.I.F. and C. & F. 12A:2-320. C.I.F. and C. Major change, deleting use Terms Reserved & F. Terms of trade terms cif and c&f 2-321. C.I.F. or C. & F.: 12A:2-321. C.I.F. or C. & Major change, deleting "net landed weights"; F.: "net landed weights"; provisions related to "payment on arrival"; "payment on specific trade terms warranty of condition on arrival"; warranty of arrival Reserved condition on arrival 2-322. Delivery “Ex Ship” 12A:2-322. Delivery “Ex Major change, deleting Reserved Ship” trade term 2-323. Form of Bill of 12A:2-323. Form of Bill of Major change, deleting to Lading Required in Lading Required in conform with other deleted

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 6 /ucc2/ucc2M061404.doc Overseas Shipment; Overseas Shipment; sections regarding trade “Overseas” Reserved “Overseas” terms 2-324. “No arrival, No 12A:2-324. “No arrival, Major change Sale” Term Reserved No Sale” Term 2-325. “Letter of Credit” 12A:2-325. “Letter of Major change, revised to Term; “Confirmed Credit” Credit” Term; “Confirmed conform to Revised Article Failure to Pay by Agreed Credit” 5 Letter of Credit 2-326. Sale on Approval 12A:2-326. Sale on Major change, clarifying and Sale or Return; Approval and Sale or the meaning of the terms Consignment Sales and Return used in the caption Rights of Creditors 2-327. Special Incidents of 12A:2-327. Special No change Sale on Approval and Sale Incidents of Sale on or Return Approval and Sale or Return 2-328. Sale by Auction 12A:2-328. Sale by Change, respecting right to Auction withdraw from auction [No equivalent sections] 12A:2-329 through 2-336 NJ non-conforming amendment inserting “Artworks Consignment Act”

Part 4. Title, Creditors, and Good-Faith Purchasers

2-401. Passing of Title; 12A: 2-401. Passing of Minor changes to Reservation for security; Title; Reservation for recognize electronic Limited Application of this security; Limited document of title Section Application of this Section 2-402. Rights of Seller’s 12A:2-402. Rights of Style changes and insertion Creditors Against Sold Seller’s Creditors Against of cross-reference to 2- Goods Sold Goods 403(2) dealing with entrustment 2-403. Power to Transfer; 12A: 2-403. Power to Changes to text but not to Good Faith Purchase of Transfer; Good Faith substance; clarifications Goods; Entrusting Purchase of Goods; Entrusting

Part 5. Performance

2-501. Insurable Interest in 12A: 2-501. Insurable No change, some style Goods; Manner of Interest in Goods; Manner changes to terms Identification of Goods of Identification of Goods 2-502. Buyer’s Right to 12A: Buyer’s Right to Change to caption and Goods on Seller’s Goods on Seller’s some language, substance Insolvency, Repudiation, Insolvency remains the same – buyer or Failure to Deliver can under certain circumstances get goods when seller is insolvent, OC revised 2-503. Manner of Seller’s 12A: 2-503. Manner of Text changes, but not as to Tender of Delivery Seller’s Tender of substance; OC revised

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 7 /ucc2/ucc2M061404.doc Delivery 2-504. Shipment by Seller 12A:2-504. Shipment of Minor text changes Seller 2-505. Seller’s Shipment 12A: 2-505. Seller’s Text changes; OC revised Under Reservation Shipment Under Reservation 2-506. Rights of Financing 12A: 2-506. Rights of Adds phrase to subsection Agency Financing Agency (1) “Except as provided in Article 5” 2-507. Effect of Seller’s 12A:2-507. Effect of Fairly substantial change, Tender; Delivery on Seller’s Tender; Delivery clarifying seller’s right to Condition on Condition reclaim goods on non- payment by buyer; new subsection (3) clarifies rights of good faith purchaser 2-508. Cure by Seller of 12A: Cure by Seller of Major change, text Improper Tender or Improper Tender or completely re-written; text Delivery; Replacement Delivery; Replacement sets forth seller’s right to cure under certain circumstances when time for performance has not expired and when that time has expired 2-509. Risk of Loss in the 12A: 2-509. Risk of Loss Change in text, particularly Absence of Breach in the Absence of Breach subsection (3) making no distinction between merchant and non- merchant sellers 2-510. Effect of Breach on 12A: 2-510. Effect of Style changes to text Risk of Loss Breach on Risk of Loss 2-511. Tender of Payment 12A:2-511. Tender of No change by Buyer; Payment by Payment by Buyer; Check Payment by Check 2-512. Payment by Buyer 12A:2-507. Payment by NJ has different term in before Inspection Buyer before Inspection; caption; no major change, exceptions style only 2-513. Buyer’s Right to 12A: 2-513. Buyer’s Right Changes deal with Inspection of Goods to Inspection of Goods clarifications and conform to changes deleting obsolete trade terms; OC revised particularly as to subsection (4) 2-514. When Documents 12A: 2-514. When Adds phrase “and except Deliverable on Documents Deliverable on as provided in Article 5” Acceptance; When on Acceptance; When on Payment Payment 2-515. Preserving 12A:2-515. Preserving No change Evidence of Goods in Evidence of Goods in Dispute Dispute

Part 6. Breach, Repudiation, and Excuse

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 8 /ucc2/ucc2M061404.doc 2-601. Buyer’s Rights on 12A: Buyer’s Rights on Changes clarify cross- Improper Delivery Improper Delivery references and deal with buyer’s right to reject 2-602. Manner and Effect 12A: 2-602. Manner and Elimination of the word of Rightful Rejection Effect of Rightful “rightful” clarifies that Rejection buyer can effectively reject though it is wrongful; subsection (2) sets forth buyer’s duties upon rejection 2-603. Merchant Buyer’s 12A: 2-603. Merchant No major change; Duties as to Rightfully Buyer’s Duties as to eliminates term Rejected Goods Rightfully Rejected Goods “rightfully,” clarifying that duties apply both to rightful and wrongful rejections 2-604. Buyer’s Options as 12A: 2-604. Buyer’s Applies to any rejections; to Salvage of Rightfully Options as to Salvage of minor conforming text Rejected Goods Rightfully Rejected Goods changes 2-605. Waiver of Buyer’s 12A: 2-605. Waiver of Major change to text but Objections by Failure to Buyer’s Objections by not to meaning; OC Particularize Failure to Particularize revised; buyer can give quick, informal notice to seller but failure to tell seller about ascertainable defects precludes buyer from reliance if seller had right to cure 2-606. What Constitutes 12A: 2-606. What Change to subsection (1) Acceptance of Goods Constitutes Acceptance of (c) reflecting new rules in Goods 608(4) – acceptance via use; other style changes to text 2-607. Effect of 12A: 2-607. Effect of Several text changes, but Acceptance; Notice of Acceptance; Notice of substance remains Breach; Burden of Breach; Burden of unchanged; OC revised Establishing Breach after Establishing Breach after Acceptance; Notice of Acceptance; Notice of Claim or Litigation to Claim or Litigation to Person Answerable Over Person Answerable Over 2-608. Revocation of 12A: 2-608. Revocation of Change is to subsection (4) Acceptance in Whole or Acceptance in Whole or dealing with post- Part Part revocation or rejection use of the goods; in general buyer must compensate seller for use; unreasonable use gives seller option of ratification 2-609. Right to Adequate 12A: 2-609. Right to Style changes only Assurance of Performance Adequate Assurance of Performance 2-610. Anticipatory 12A: 2-610. Anticipatory Major change to text,

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 9 /ucc2/ucc2M061404.doc Repudiation Repudiation adding subsection (2) providing clarification on when repudiation occurs 2-611. Retraction of 2-611. Retraction of Style changes Anticipatory Repudiation Anticipatory Repudiation 2-612. “Installment 12A: 2-612. “Installment No major change in text, Contract”; Breach Contract”; Breach but major revision of OC 2-613. Casualty to 12A: 2-613. Casualty to Text changes: replaces Identified Goods Identified Goods word “avoided” with “terminated” in subsection (a) 2-614. Substituted 12A: 2-614. Substituted Text changes replacing Performance Performance term “delivery” with “performance” in subsection (1); OC revised 2-615. Excuse by Failure 12A: 2-615. Excuse by Major change substituting of Presupposed Conditions Failure of Presupposed “performance” for Conditions “delivery” thus broadening the terminology; see also 2-614 and 2-616 2-616. Procedure on 12A: 2-616. Procedure on Major change conforming Notice Claiming Excuse Notice Claiming Excuse text to changes made in 2- 614 and 2-615 and to 2- 613(a); OC revised

Part 7. Remedies

2-701. Remedies for 12A: 2-701. Remedies for No change Breach of Collateral Breach of Collateral Contracts Not Impaired Contracts Not Impaired 2-702. Seller’s Remedies 12A: 2-702. Seller’s Numerous text changes; no on Discovery of Buyer’s Remedies on Discovery of major substantive changes Insolvency Buyer’s Insolvency 2-703. Seller’s Remedies 12A: 2-703. Seller’s Major text change; section in General Remedies in General is completely rewritten and longer; not intended to make substantive changes to basic structure of remedies 2-704. Seller’s Right to 12A: 2-704. Seller’s Right Style changes to text Identify Goods to the to Identify Goods to the Contract Notwithstanding Contract Notwithstanding Breach or to Salvage Breach or to Salvage Unfinished Goods Unfinished Goods 2-705. Seller’s Stoppage 12A: 2-705. Seller’s Changes to text but do not of delivery in Transit or Stoppage of delivery in alter meaning; OC revised Otherwise Transit or Otherwise 2-706. Seller’s Resale 12A: 2-706. Seller’s Numerous text changes for Including Contract for Resale Including Contract style; new subsection (7) Resale for Resale added providing that failure of seller to resell does not bar other remedy;

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 10 /ucc2/ucc2M061404.doc OC revised 2-707. “Person in the 12A: 2-707. “Person in the Major Change giving Position of a Seller” Position of a Seller” person same rights as seller 2-708. Seller’s Damage for 12A: 2-708. Seller’s Major change; provides Non-acceptance Damage for Non- for consequential and Nonacceptance or acceptance or Repudiation incidental damages; Repudiation corrects statement of damage formula; corrects prior version to text to make consistent with case law development; OC revised 2-709. Action for the Price 12A: 2-709. Action for the Style changes Price 2-710. Seller’s Incidental 12A:2-710. Seller’s Major change to caption and Consequential Incidental Damages and text; providing Damages guidance on definition of consequential damages and adding new subsection (3) preventing the collection of consequential damages in a consumer contract 2-711. Buyer’s Remedies 12A: 2-711. Buyer’s Major change; section is in General; Buyer’s Remedies in General; completely rewritten Security Interest in Buyer’s Security Interest parallel to changes made to Rejected Goods in Rejected Goods 2-703; OC revised 2-712. “Cover”; Buyer’s 12A: 2-712. “Cover”; Numerous text changes Procurement of Substitute Buyer’s Procurement of Goods Substitute Goods 2-713. Buyer’s Damages 12A: 2-713. Buyer’s Major change; adding new for Non-Delivery Damages for Non- section subsection (1)(b) Nondelivery or Delivery or Repudiation making rules consistent Repudiation with those made for sellers; OC revised 2-714. Buyer’s Damages 12A: 2-714. Buyer’s Text changes for Breach in Regard to Damages for Breach in Accepted Goods Regard to Accepted Goods 2-715. Buyer’s Incidental 12A: 2-715. Buyer’s No change and Consequential Incidental and Damages Consequential Damages 2-716. Buyer’s Right to 12A:2-716. Buyer’s Right Major change to caption Specific Performance or; to Specific Performance or and text, specifying when Buyer’s Right to Replevin Replevin and when not specific performance is available remedy 2-717. Deduction of 12A: 2-717. Deduction of No change Damages from the Price Damages from the Price

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 11 /ucc2/ucc2M061404.doc 2-718. Liquidation or 12A: 2-718. Liquidation or Fairly major change to Limitation of Damages; Limitation of Damages; language of when Deposits Deposits liquidated damages are enforceable; OC revised 2-719. Contractual 12A: 2-719. Contractual No change Modification or Limitation Modification or Limitation of Remedy of Remedy 2-720. Effect of 12A: 2-720. Effect of No change “Cancellation” or “Cancellation” or Rescission” on Claims for Rescission” on Claims for Antecedent Breach Antecedent Breach 2-721. Remedies for Fraud 12A: 2-721. Remedies for No change Fraud 2-722. Who Can May Sue 12A: 2-722. Who Can Sue Style changes only Third Parties for Injury to Third Parties for Injury to Goods Goods 2-723. Proof of Market: 12A: 2-723. Proof of NJ has added “price” to Time and Place Market Price: Time and caption; fairly major Place change to text: subsection (1) completely rewritten, taking out repudiation that is dealt with in 2-708(1)(b) and 2-713(1)(b); core is price that is reasonable substitute in commercial context 2-724. Admissibility of 12A: 2-724. Admissibility Style changes Market Quotations of Market Quotations 2-725. Statute of 12A: 2-725. Statute of Major change; completely Limitations in Contracts Limitations in Contracts rewritten and revised; OC for Sale for Sale revised; enlarges the limitation period to 4 years after action accrues, potentially to 5 if breach is discovered near end of limitation period; there are 8 different accrual rules5

Part 8. Transitional Provisions

2-801. Effective Date [New] Provides for effective date 2-802. Amendment of [New] Explicitly provides that Existing Article 2 Legislature amends existing Article 2 2-803. Application to [New] Specifies to which Existing Relations transactions the amended article applies 2-804. Savings Clause [New] If transaction is entered

5 Linda J. Rusch, supra note 4 at 88-89 states, “One of the most notable changes to the remedies scheme of Article 2 is the revision of the statute of limitations.” In summary, the time period is enlarged [four years after accrual]; the time period can be reduced to not less than one year, except for consumer contracts, and 8 different accrual rules delineate the basic rule: a cause of action accrues when the breach occurs.

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 12 /ucc2/ucc2M061404.doc into before effective date, then it is still governed by any law etc. repealed by Amended Article 2

U.C.C. ARTICLE 2 – MEMORANDUM JUNE 14, 2004 – PAGE 13 /ucc2/ucc2M061404.doc