Six Things New York State Business Owners Should Know about the Uniform Commercial Code (UCC)

BOHEMIA, N.Y., Nov. 5, 2013 /PRNewswire/ -- Whether your business purchases or sells goods, the New York State Uniform Commercial Code (UCC) affords certain protections and makes specific requirements. "It's best to be aware of the provisions that affect your business," says Steve Taitz, managing partner of the Long Island Law Firm of Roe Taroff Taitz & Portman, LLP. "For example, what happens if as buyer you receive merchandise that is defective or not what you ordered?  What happens if as seller you ship merchandise and the buyer refuses to pay for it?" He has compiled a list of the Six Things New York State Business Owners Should Know about the Uniform Commercial Code (UCC).

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Six Things to Know about the UCC

1. Prompt notification is necessary. A buyer of goods who has had a reasonable opportunity to inspect the goods received is deemed to have accepted them unless he "seasonably" notifies the seller that the goods are rejected. (UCC sections 2-602, 2-606). This means that you should make a decision about whether you plan to reject merchandise fairly quickly, says Taitz.
2. You use it, you bought it. In addition, the goods are deemed accepted if the buyer performs any act that is inconsistent with the seller's ownership. (UCC section 2-606(1)(c)). "So if you receive merchandise, make use of it, then decide you don't want it, it's too late," says Taitz.
3. The seller has the right to make things right. Another provision limits the buyer's ability to reject goods for minor non-conformity by affording the seller a reasonable opportunity to correct defects (UCC section 2-508). The seller must notify the buyer of his intention to cure.  The buyer may be obliged to allow the seller to cure any non-conformity even after the seller's time for performance has passed. "You must allow a seller to correct a small defect or inaccuracy before rejecting a purchase," says Taitz.
4. Don't leave it out in the rain. A buyer in possession of goods that he has rejected has a duty to take reasonable care of the goods long enough to permit the seller to reclaim them (UCC section 2-602(2)(b)). "If you are going to reject merchandise you've requested, you must take care to protect it while it is in your possession," says Taitz.
5. Failure to pay can cause big problems. If a buyer wrongfully rejects goods or fails to make a payment due on or before delivery, the seller may stop delivery of the goods, resell the goods and recover any damages incurred, or in a proper case, recover the contract price.  (UCC section 2-703). "If you contract for merchandise, you have an obligation to pay based on the agreed upon terms," says Taitz.
6. Read your lease agreement carefully.  If you lease goods, you should be aware that the UCC contains a 4 year statute of limitations for an action for default.  However, for businesses, a contract may reduce this time to as little as one year. (UCC section 2-A-506).  "Business leases are different than consumer leases," says Taitz. "And part of this difference is the ability to shorten by contract the length of time one has to sue over a dispute."

"There are many provisions to the Uniform Commercial Code that can have significant impact on buyer and seller requirements. We recommend that businesses engage a knowledgeable attorney to review their options when a dispute arises," says Taitz.

About Roe Taroff Taitz & Portman
Roe Taroff Taitz & Portman, LLP provides a wide variety of legal services to Long Island. Our attorneys have served the residents of Suffolk County for more than two decades. Comprised of attorneys, legal assistants and administrative staff, the firm provides support at various levels of legal expertise. Our resources are available to both businesses and individuals looking for experienced legal representation. The firm's primary areas of concentration include civil litigation, creditor's rights law, trust and estates issues, estate planning, admiralty claims, business counseling and real estate matters. For more information, please call 631-475-4400 or visit http://www.RTTPLaw.com

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SOURCE Roe Taroff Taitz and Portman, LLP