2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 2 - Sales › Part 1 - SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER › Section 55-2-106 - Definitions: "contract"; "agreement"; "contract for sale"; "sale"; "present sale"; "conforming" to contract; "termination"; "cancellation."

(1) In this article unless the context otherwise requires "contract" and "agreement" are limited to those relating to the present or future sale of goods. "Contract for sale" includes both a present sale of goods and a contract to sell goods at a future time. A "sale" consists in the passing of title from the seller to the buyer for a price (Section 2-401 [55-2-401 NMSA 1978]). A "present sale" means a sale which is accomplished by the making of the contract.
(2) Goods or conduct including any part of a performance are "conforming" or conform to the contract when they are in accordance with the obligations under the contract.
(3) "Termination" occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach. On "termination" all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives.
(4) "Cancellation" occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of "termination" except that the cancelling party also retains any remedy for breach of the whole contract or any unperformed balance.
History:
1953 Comp., § 50A-2-106, enacted by Laws 1961, ch. 96, § 2-106.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
Prior uniform statutory provision.
— Subsection (1) - Section 1 (1) and (2), Uniform Sales Act; Subsection (2) - none, but subsection generally continues policy of Sections 11, 44 and 69, Uniform Sales Act; Subsections (3) and (4) - none.
Purposes:
1. Subsection (1): "Contract for sale" is used as a general concept throughout this article, but the rights of the parties do not vary according to whether the transaction is a present sale or a contract to sell unless the article expressly so provides.
2. Subsection (2): It is in general intended to continue the policy of requiring exact performance by the seller of his obligations as a condition to his right to require acceptance. However, the seller is in part safeguarded against surprise as a result of sudden technicality on the buyer's part by the provisions of Section 2-508 on seller's cure of improper tender or delivery. Moreover usage of trade frequently permits commercial leeways in performance and the language of the agreement itself must be read in the light of such custom or usage and also, prior course of dealing, and in a long term contract, the course of performance.
3. Subsections (3) and (4): These subsections are intended to make clear the distinction carried forward throughout this article between termination and cancellation.
4. In some transactions, the passing of title to goods from the seller to the buyer in return for a price is part of a larger transaction. The other aspects of the transaction might involve the seller providing services to the buyer, the seller leasing other goods to the buyer, or the seller transferring to the buyer rights to property other than goods. Such a transaction is a "hybrid transaction," as defined in Subsection (5). Section 2-102 [55-2-102 NMSA 1978] indicates the extent to which this Article applies to a hybrid transaction.
5. A hybrid transaction is a single transaction. If contracting parties enter into separate agreements at the same time, each agreement creating a separate transaction, each transaction must be evaluated separately to determine if it is a hybrid transaction.
Example 1.
To sell an ongoing business, Seller and Buyer enter into three separate written agreements: (i) a sale of goods used in the business; (ii) an agreement for Seller to provide consulting services to Buyer for a period of six months; and (iii) a sale of intangible assets associated with the business. Each agreement creates a separate transaction. None of those transactions involves both a sale of goods and the provision of services, the lease of other goods, or the sale, lease, or license of property other than goods. Thus, none of the separate transactions constitutes a hybrid transaction.
Example 2.
To sell an ongoing business, Seller and Buyer enter into two separate written agreements: (i) a sale of goods and intangible assets used in the business; and (ii) an agreement for Seller to provide consulting services to Buyer for a period of six months, and not to compete with Buyer for a period of one year. The agreement to sell goods and intangible assets creates a hybrid transaction. The agreement for consulting services, a separate transaction, is not a hybrid transaction.
Even when contracting parties enter into a single agreement involving both a sale of goods and a sale, lease, or license of other property or the provision of services, the elements of the single agreement may be so independent that they create separate transactions. In that case, no hybrid transaction would exist merely because the separate transactions arose out of the same agreement.
Example 3.
Farmer A and Farmer B sign a written agreement pursuant to which Farmer A will sell a tractor to Farmer B and Farmer A will board and feed Farmer B's cattle until the cattle are sold. The agreement specifies a price for the tractor, which is due upon delivery, and specifies a mechanism for determining the price for Farmer A's services, which is to be paid when the cattle are sold. The parties would have entered into an agreement to buy and sell the tractor even if they had not entered into an agreement to board and feed the cattle, and vice versa. Two separate transactions arise from the single agreement, neither of which is a hybrid transaction. Article 2 applies to the sale of the tractor. Other law applies to the agreement to board and feed the cattle.
Example 4.
In a single record, Landscaper agrees to sell plants to Homeowner and to install the plants on Homeowner's property. The agreement specifies a total price but provides no mechanism for determining what portion of the price is allocable to the sale of plants and what portion is allocable to the installation services. Because the terms of the agreement relating to the sale of goods and those relating to services are not severable, the transaction is a hybrid transaction.
Cross references.
— Point 2: Sections 1-203, 1-205, 2-208 and 2-508.
"Agreement". Section 1-201.
"Buyer". Section 2-103.
"Contract". Section 1-201.
"Goods". Section 2-105.
"Party". Section 1-201.
"Remedy". Section 1-201.
"Rights". Section 1-201.
"Seller". Section 2-103.
ANNOTATIONS
A sale implies seller's ownership of the thing sold
as well as the passing of title therein to the buyer.
Valdez v. Garcia
, 1968-NMCA-066, 79 N.M. 500, 445 P.2d 103, cert. denied, 79 N.M. 449, 444 P.2d 776.
Agreement, that discount on merchandise applicable for certain time, not contract for sale.
— An agreement requiring that a certain number of computers must be purchased by a certain time in order for a discount to apply was not a contract for sale, where no title was passed for a price and there was no requirement to purchase even one computer.
Data Gen. Corp. v. Commc'ns Diversified, Inc.
, 1986-NMSC-088, 105 N.M. 59, 728 P.2d 469.
Continued liability on purchase agreement.
— Where the purchase agreement was not an executory document, failure to make any of the subsequent payments after the deposit does not render it executory and appellant is still liable for the appropriate tax.
Garfield Mines Ltd. v. O'Cheskey
, 1973-NMCA-128, 85 N.M. 547, 514 P.2d 304.
Reasonable to require loss claims to be made within two days.
— In general, a contract provision requiring claims of loss to be made within two days of delivery is reasonable, lawful and not unconscionable.
Bowlin's, Inc. v. Ramsey Oil Co.
, 1983-NMCA-038, 99 N.M. 660, 662 P.2d 661, cert. denied, 99 N.M. 644, 662 P.2d 645.
Distributorship agreements.
— The purpose of distributorship agreements is to provide a contract for the sale of a product from a manufacturer at wholesale prices that is to be marketed in a specific area by the distributor. As such, a distributorship agreement should be subject to the provisions of the UCC.
United Wholesale Liquor Co. v. Brown-Forman Distillers Corp.
, 1989-NMSC-030, 108 N.M. 467, 775 P.2d 233.
Law reviews.
— For article, "Special Property Under the Uniform Commercial Code: A New Concept in Sales," see 4 Nat. Resources J. 98 (1964).
Am. Jur. 2d, A.L.R. and C.J.S. references.
— 15A Am. Jur. 2d Commercial Code §§ 39, 73, 90, 113, 114; 68A Am. Jur. 2d Secured Transactions § 13.
Validity and construction of contract for sale of season's output, 1 A.L.R. 1392, 9 A.L.R. 276, 23 A.L.R. 574.
Contract for sale of goods as entire or divisible, 2 A.L.R. 643.
Divisibility of contract for the sale of an outfit, plant or machinery, 4 A.L.R. 1442.
Passing of title to personal property under a contract of sale, as affected by fact that contract covers both real and personal property, 117 A.L.R. 395.
What constitutes a transaction, a contract for sale, or a sale within the scope of UCC Article 2, 4 A.L.R.4th 85.
Applicability of UCC Article 2 to mixed contracts for sale of goods and services, 5 A.L.R.4th 501.
77A C.J.S. Sales § 1 et seq.