Sales and Leases | 38
that Article 2 does not apply at all. For instance, a seller may sell goods to a buyer and retain a security interest in the goods to secure the purchase price. Similarly, the buyer may borrow from a third party to finance the purchase, granting the third party a security interest in the goods to secure repayment. In these hybrid sales-security transactions, Article 2 governs the sales aspects, and Article 9 governs the security aspects. But if a transaction (even one labeled a sale) is really, in substance, only a secured transaction subject to Article 9, then Article 2 will not apply at all. [U.C.C. § 2-102 (1951); 2 Anderson U.C.C. § 2-102:18 (3d. ed.), Westlaw (database updated Dec. 2020).] b. Leases A lease of goods falls under UCC Article 2A, not Article 2. [ See U.C.C. § 2A-102 (1990); Scope of Article 2A on Leases of Goods, infra .] c. Transactions in Real Property Real property is not a good. Accordingly, Article 2 does not apply to transactions in real estate. [ See Foster v. Colo. Radio Corp. , 381 F.2d 222 (10th Cir. 1967).] d. Bailments Article 2 does not apply to bailments of goods. As mentioned, in a sale of goods, title to goods passes, for a price, from a seller to a buyer. In a bailment, by contrast, one party (the bailor) transfers mere possession of goods to another party (the bailee), usually for a limited time and a specific purpose. Once the specific purpose is accomplished, the bailee must return possession of the goods to the bailor. Oftentimes, a single transaction will involve both a bailment and a sale of goods. Here, the prevailing view seems to be that Article 2 applies to the sale aspect of the transaction but not the bailment aspect. [ See 2 Anderson U.C.C. §§ 2-105:68, 2-105:69 (3d. ed.), Westlaw (database updated Dec. 2020); Garfield v. Furniture Fair-Hanover , 274 A.2d 325 (N.J. Super. 1971).] Example : A teacher purchased a bedroom set and dresser from a furniture retailer. It would take at least two weeks from the time of purchase for the retailer to have the set delivered. Accordingly, the retailer lent the teacher a temporary bedroom set and dresser to use until the items she purchased could arrive. Shortly afterward, the teacher sat on the temporary bed to tie her shoe. The bed immediately collapsed, injuring the teacher. The teacher then sued the retailer, invoking the various warranties under Article 2. On similar facts, the trial court held that Article 2 did not apply to the loan of the temporary bedroom set. The loan was a bailment, and Article 2 does not apply to bailments. Certainly, the loan arose as part
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