The Merchant of Section 2-314: Who Needs Him

The Uniform Commercial Code's section 2-314 determines whether the buyer or the seller must suffer the loss occasioned by unmerchantable goods: if the seller is a merchant, he assumes the loss; if the seller is not a merchant, the buyer assumes the loss. The Code, however, fails to provide any policy statement justifying its section 2-314 merchant distinction. This Article examines and evaluates this distinction from a number of perspectives, including the Code's three warranty provisions, its overall warranty philosophy, its remedy and disclaimer provisions, and its section 2-104 merchant definition. Particular attention is given the history of the Code's drafting.

The Article explores the historical connection linking seller status to seller responsibility for quality and analyzes the merchant restriction in terms of the public policies underlying the creation of an implied warranty of merchantability. The Article concludes that section 2-314's merchant distinction is inconsistent with the Code's overall warranty scheme and philosophy, as well as with modem notions of unjust enrichment. The distinction is not a product of considered reasoning, but an atavistic remnant of our caveat emptor past and should be eliminated.