UCC § 2-510: A Commercial Law Blunder?

Authors

Steven L. Schwarcz, Duke Law SchoolFollow

Document Type

Article

Publication Date

2024

Abstract

Commercial law, as codified by the Uniform Commercial Code ("UCC"), recognizes certain important policy goals and commercial realities as a basis to override property law. Among other provisions, § 2-509 of the UCC allocates the risk of loss to goods in transit to the party who controls and would be expected to insure the goods, whether or not that party owns the goods at the time of their loss. Promoting commercial reality over the "arbitrary shifting" of rights based on property has been widely praised. Shortly after that risk-of-loss provision was enacted, however, it was modified by an additional UCC provision, § 2-510, which governs risk of loss where there has been a breach. This Article shows that the implicit rationale for § 2-510, that breaching a contract is morally wrong, is simply incorrect. Furthermore, the Article argues that provision's convoluted risk reallocation can undermine commercial realities and produce unreasonable, if not absurd, results.

Citation

Steven L. Schwarcz, UCC § 2-510: A Commercial Law Blunder?, 103 Texas Law Review Online 57-72 (2024)