UCC 2-105 defines the goods covered by Article 2 and explains how the law treats future goods, partial interests, lots, and commercial units. The classification can affect contract formation, warranties, performance obligations, and remedies.
Key Takeaways
- Goods are generally things that are movable when identified to a contract for sale.
- The definition includes specially manufactured goods, unborn animals, growing crops, and certain identified items connected to real property.
- Money used to pay the price, investment securities, and things in action are expressly excluded.
- Goods can be sold before they exist, but UCC 2-105 treats them as future goods until they are existing and identified.
- Article 2 can govern sales by non-merchants, although some UCC rules apply only when a merchant is involved.
- Services, software, fixtures, and mixed transactions require analysis under the governing state's statutes and court decisions.
UCC 2-105 Definition of Goods Text in Plain English
The UCC goods definition starts with movability. Section 2-105 describes goods as all things, including specially manufactured goods, that are movable when they are identified to the contract for sale. Identification connects particular goods to a particular contract. The goods do not necessarily need to be in the buyer's possession or ready for delivery when the parties sign.
The definition expressly includes unborn young of animals, growing crops, and certain identified things attached to real property that will be severed. Those land-related items must also be considered under UCC 2-107 and the corresponding state statute.
Three express exclusions appear in the UCC 2-105 definition of goods: the money used to pay the price, investment securities governed by Article 8, and things in action, often called choses in action. A contractual right to collect a debt, for example, is not a movable product merely because the right has value.
Article 2 focuses on transactions in goods. A sale generally involves passing title from a seller to a buyer for a price, as addressed by UCC 2-106. You can review the broader structure in this overview of Uniform Commercial Code basics. The model UCC does not automatically control every dispute. The commercial code enacted by the governing state, together with that state's cases, supplies the applicable law.
Section-by-Section Breakdown of 2-105 UCC
UCC 2-105 contains six subsections. Each resolves a different classification or transfer issue:
| Subsection | Rule | Practical Meaning |
|---|---|---|
| 2-105(1) | Defines goods and lists express exclusions. | Ask whether the identified subject is movable and part of a contract for sale. |
| 2-105(2) | Defines future goods. | No interest passes until goods are existing and identified. An attempted present sale instead operates as a contract to sell. |
| 2-105(3) | Allows a sale of a part interest. | A seller need not transfer the entire interest in existing, identified goods. |
| 2-105(4) | Addresses shares of identified fungible bulk. | An agreed share or quantity can be sold even if the bulk's total quantity has not been determined, subject to the seller's interest. |
| 2-105(5) | Defines a lot. | A lot is a parcel or article handled as a separate sale or delivery, even if it does not complete the contract. |
| 2-105(6) | Defines a commercial unit. | A market-recognized whole may be one item, a set, or a quantity that would lose material character or value if divided. |
A furniture suite can be a commercial unit because the relevant market treats the set as one whole. A machine can also be a commercial unit. By contrast, a lot concerns how goods are grouped for a separate sale or delivery. The two terms can overlap in practice, but they answer different questions.
UCC Goods, Exclusions, and Transaction-Specific Categories
The movability rule provides a starting point, not an automatic answer for every modern transaction. The contract's substance, the time of identification, related UCC provisions, and state law can all affect the result.
| Category | Common Examples | Reason |
|---|---|---|
| Generally treated as goods | Equipment, vehicles, inventory, furniture, manufactured products, animals, and crops | These items are ordinarily movable when identified to a sales contract. |
| Generally outside the definition | Services, land, buildings, payment money, investment securities, and legal claims | They are not movable products covered by the definition, or UCC 2-105 expressly excludes them. |
| Depends on the transaction or jurisdiction | Software, digital products, fixtures, utilities, custom systems, and goods bundled with services | Courts may examine delivery, licensing terms, attachment to land, contract structure, and state precedent. |
Special manufacture does not remove an item from the definition. A custom machine can remain a good even when substantial labor is needed to design and build it. Similarly, the UCC does not limit Article 2 to sales between merchants. A casual sale can involve goods, although merchant-specific provisions may not apply.
Classification is only the first step. Once Article 2 applies, separate provisions may govern warranties, delivery, acceptance, rejection, and damages. For example, a buyer receiving defective or otherwise nonconforming goods must evaluate rules beyond Section 2-105.
Future Goods, Identification, and Transferable Interests
A common misconception is that goods must exist when the parties make their contract. UCC 2-105 permits agreements involving goods that will be manufactured, grown, acquired, or otherwise come into existence later. It calls goods that are not both existing and identified future goods.
The distinction affects what the transaction accomplishes at that moment. An interest cannot pass until the goods are existing and identified. If parties describe a present sale of future goods, Section 2-105 treats the arrangement as a contract to sell rather than an immediate transfer of an ownership interest. A contract for next season's crop can therefore be enforceable even though the crop has not been planted, but the buyer does not receive a present interest under Section 2-105 until the statutory conditions are met.
Identification can occur in a manner expressly agreed by the parties or under other applicable Article 2 rules. Clear contract language should specify the product, quantity or share, source, production period, and method of identification. Those details reduce disputes about which goods belong to the contract.
The section also permits part interests in existing identified goods. For fungible goods held in an identified bulk, such as an agreed quantity of a commodity, the buyer can acquire an ownership share even when the bulk's total quantity is undetermined. The transfer remains limited by the seller's interest. This rule differs from future goods because it concerns an identified bulk that already exists, not products that have yet to exist or be identified.
Does the UCC Apply to Services or Mixed Contracts?
Article 2 does not govern a contract that is solely for services. The harder question arises when one agreement covers both products and labor, such as purchasing equipment with installation, ordering a custom system with consulting, or hiring a contractor to supply and assemble materials.
Courts often examine the transaction's overall substance to determine whether the sale of goods or the services component predominates. Factors may include the agreement's wording, the allocation of price, the provider's business, and the reason the customer entered the deal. Not every jurisdiction applies the same test in the same way. Some courts may analyze separable portions of a transaction rather than classify the entire agreement under one body of law.
Labor involved in producing or distributing an item does not necessarily convert a goods sale into a service contract. A specially manufactured product can still be a good. Conversely, materials supplied incidentally while performing professional or technical services do not necessarily place the entire relationship under Article 2.
The distinction affects more than terminology. Article 2 supplies rules concerning warranties, contract formation, acceptance, rejection, and available remedies. Common law may govern a service-dominant agreement. If the seller supplies intellectual property with a product, the parties should also consider the UCC's warranty against infringement and any contractually stated limits.
Software, Fixtures, Aircraft, and Items Connected to Land
Software does not have one nationwide classification for every contract. A transaction involving a transferred software product may receive different treatment from a license, subscription, hosted platform, maintenance arrangement, or development service. Courts may consider the delivery method, contract language, transfer restrictions, service obligations, and the commercial substance of the deal. State statutes addressing digital products can also affect the analysis.
Real property itself is not a good under UCC 2-105. Items connected to land require more care. UCC 2-107 addresses certain minerals, structures, crops, timber, and other things that the parties expect to sever from realty. Who will perform the severance and whether removal can occur without material harm may matter under that provision. Fixtures can also raise issues outside Article 2, including real-property and secured-transaction rules.
Growing crops fall within the stated goods definition. Nursery trees may qualify when they are identified and sold for severance, but the governing state's enactment and cases determine the result. A Washington transaction involving nursery trees should therefore be checked against Washington's commercial code and relevant decisions rather than resolved from the model language alone.
Aircraft are movable physical items and are generally capable of qualifying as goods. The contract may still implicate separate title, registration, financing, and federal requirements. Vehicle buyers and sellers can also review these UCC vehicle transaction rules for related contract issues.
If your agreement combines products and services, involves software or property attached to land, spans multiple states, or is already disputed, you can post your legal need on UpCounsel's marketplace. A business attorney can identify the governing state law, classify the transaction, review the contract language, and determine which UCC rules and remedies may apply. Responses typically arrive within a day, helping you address the issue before taking a contractual position.
State Law and Related UCC Article 2 Sections
The UCC is a model code, while each jurisdiction enacts its own commercial statutes. Many enacted versions closely track UCC 2-105, but numbering, wording, amendments, and judicial interpretations can differ. Start with the contract's governing-law clause, then compare the model provision with the current commercial code of the selected state. A court may decline to apply the chosen law in some circumstances, so location and transaction contacts can also require analysis.
Several neighboring provisions help place the UCC Article 2 definition of goods in context. UCC 2-102 states Article 2's general scope for transactions in goods. Section 2-104 defines merchants and related terms. Section 2-106 addresses contracts for sale, present sales, and conformity. Section 2-107 covers goods connected to realty. Other commonly relevant provisions include Section 2-201 on formal requirements for certain sales contracts, Section 2-205 on firm offers, and Section 2-509 on risk of loss.
Do not confuse Article 2 with Article 3. UCC 3-104 concerns negotiable instruments, not the definition of goods. This explanation of UCC Article 3 rules covers that separate subject.
Remedies also come after classification. UCC 2-716 can permit specific performance when goods are unique or in other proper circumstances. In an Arizona dispute over allegedly unique goods, for example, the court would first determine whether the transaction falls under Arizona's enacted Article 2. Only then would the court address the state's version of Section 2-716 and applicable Arizona precedent.
How to Classify a Contract Before Relying on Article 2
Begin with the transaction rather than the contract's title. Calling an arrangement a license, purchase, project, or service agreement does not necessarily decide which law applies. Review what each party must provide and what the buyer is principally paying to receive.
- Identify the subject matter. List every product, service, license, subscription, property interest, and deliverable covered by the agreement.
- Ask when the item becomes movable. UCC 2-105 examines movability when goods are identified to the contract, not merely when negotiations begin.
- Separate express exclusions. Determine whether the transaction concerns payment money, securities, legal claims, land, or services rather than goods.
- Check existence and identification. If the product does not yet exist or has not been identified, classify it as a future good and distinguish the contract to sell from a present transfer.
- Analyze bundled obligations. Compare the value, purpose, and wording of the goods and services components under the governing jurisdiction's approach.
- Confirm state law. Review the enacted commercial code, related statutes, and controlling court decisions.
- Address consequences separately. After classification, analyze formation, warranties, delivery, acceptance, risk of loss, breach, and remedies.
Keep records showing product specifications, serial numbers, inventory sources, manufacturing stages, crop locations, or other identification details. Those facts can determine when an interest attached and which products the agreement covered. Contract terms should also state governing law, delivery units, acceptance procedures, service obligations, and remedies instead of assuming the UCC will fill every gap.
Frequently Asked Questions
What Are Goods Under the UCC?
Goods are movable things identified to a contract for sale, subject to the exclusions in UCC 2-105. The category can include custom products, animals, crops, and qualifying items intended to be removed from land. A court will examine the actual subject of the agreement, not simply the label selected by the parties.
Does the UCC Apply to Services?
The UCC does not apply to a services-only contract under Article 2. When services accompany products, the answer depends on the governing jurisdiction's method for classifying mixed transactions. Detailed invoices and separate statements of work may help establish which obligations concern goods, although separating prices does not by itself guarantee that a court will apply different laws.
Does the UCC Apply to Real Estate?
Article 2 generally does not govern the sale of real estate. A transaction involving land may nevertheless contain a separate sale of crops, timber, minerals, a structure, or another item intended for removal. The timing and responsibility for severance can affect whether the item is treated as a good under the state's version of UCC 2-107.
Are Nursery Trees Considered Goods Under UCC Article 2 in Washington?
Nursery trees may be goods in Washington when they are identified to the contract and sold for severance from the land. The specific result can depend on the trees' status, the agreed method of removal, Washington's enacted UCC provisions, and state case law. Parties should also distinguish a sale of trees from landscaping or planting services.
Are Aircraft Considered Goods Under UCC Article 2?
Aircraft can qualify as goods because they are movable physical property sold for a price. Article 2 classification does not replace the separate legal requirements governing aircraft ownership, registration, financing, or recordation. A transaction involving an aircraft lease, fractional interest, or extensive operational services may also require analysis beyond a straightforward sale-of-goods contract.
Is Software a Good Under the UCC?
Software may be treated as a good, but there is no single answer for every jurisdiction or delivery model. A court may distinguish a transferred software product from a limited license, hosted subscription, custom development project, or continuing service. The agreement's rights, restrictions, payment structure, and performance obligations often matter more than the word "software" alone.
What Are the Exceptions to the Perfect Tender Rule?
Exceptions and limitations can arise from the parties' agreement, a seller's right to cure, installment-contract rules, course of performance, and other Article 2 provisions. The perfect tender rule concerns whether delivered goods conform to the contract, not whether the subject first qualifies as goods. State law and the contract should be reviewed before rejecting delivery or canceling an order.
