Mixed Contracts and the U.C.C.: A Proposal for a Uniform Penalty Default to Protect Consumers

Abstract

Although Article 2 of the Uniform Commercial Code provides a standard set of rules for goods transactions, it is silent on the treatment of mixed goods and services contracts. Without guidance from the Code, courts have taken a number of different approaches to such contracts. These varied tests encourage opportunistic behavior: sellers withhold information about implied warranties during negotiations, and can later claim they do not apply. Uninformed buyers must either forfeit their warranty protection or resort to an expensive court determination of the Code’s applicability. This Article proposes a “penalty default” of applying the Code in consumer contracts that involve both goods and services. The new default rule would induce sellers to provide warranty information to buyers at the time of contracting. When sellers failed to provide information, buyers would receive warranties that sellers could not easily refuse to honor. If states adopted the proposal, therefore, buyers and sellers would decide warranty applicability during negotiations. Consumers would be protected from unbalanced contracts and courts would be relieved of resolving mixed contract warranty disputes.