Printable Format84-1-103. Construction of uniform commercial code to promote its purposes and policies; applicability of supplemental principles of law. (a) The uniform commercial code must be liberally construed and applied to promote its underlying purposes and policies, which are:
(1) To simplify, clarify, and modernize the law governing commercial transactions;
(2) to permit the continued expansion of commercial practices through custom, usage and agreement of the parties; and
(3) to make uniform the law among the various jurisdictions.
(b) Unless displaced by the particular provisions of the uniform commercial code, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions.
History: L. 2007, ch. 89, § 3; July 1, 2008.
KANSAS COMMENT, 1996
1. This section is perhaps one of the most important sections in the Code. It recognizes that even the Code does not cover everything, and other principles of law and equity must supplement the Code in appropriate circumstances. The list of subject matters in this section is illustrative only; the courts are free to apply other pre-Code and non-Code principles of law.
2. The Kansas courts have generally recognized the policy of this section, and have often used it to supplement the Code with other general principles of law. See, for example, Perry v. Goff Motors, Inc. 12 K.A.2d 139, 736 P.2d 949 (1987) (rescission); Weidensaul v. Greenhouse Restaurant of Lawrence, Inc., 13 K.A.2d 95, 762 P.2d 196 (1988) (accord & satisfaction); Zurn Constructors, Inc. v. B.F. Goodrich Co., 746 F. Supp. 1051 (D. Kan. 1990) (tolling doctrines); Kansas City Power & Light Co. v. Pittsburg & Midway Coal Mining Co., 1989 U.S. Dist. LEXIS 15036 (D. Kan. 1989) (frustration of purpose); Leaderbrand v. Central State Bank of Wichita, 202 K. 450, 450 P.2d 1 (1969) (principal and agent); Decatur Coop. Ass'n v. Urban, 219 K. 171, 547 P.2d 323 (1976) (promissory estoppel); United States Fidelity and Guar. Co. v. First State Bank, 208 K. 738, 494 P.2d 1149 (1972) (non-Code priority rules); Hanover Ins. Cos. v. Brotherhood State Bank, 482 F. Supp. 501 (D. Kan. 1979) (suretyship); Cairo Coop. Exch. v. First Nat'l Bank of Cunningham, 228 K. 613, 620 P.2d 805 (1980), modified, 229 K. 184, 624 P.2d 420 (1981) (estoppel); Powers v. Coffeyville Livestock Sales Co., 665 F.2d 311 (10th Cir. 1981) (applying Kansas law) (rules of interpretation); North Central Kansas Prod. Credit Ass'n v. Washington Sales Co., 223 K. 689, 577 P.2d 35 (1978) (waiver).
Revisor's Note:
Former section 84-1-103 was repealed by L. 2007, ch. 89, § 49 and the number reassigned to the current text.
Law Review and Bar Journal References:
Cited in article concerning sureties, Larry A. Withers, 10 W.L.J. 356, 366 (1971).
"URLTA, Kansas, and the Common Law," Michael J. Davis, 21 K.L.R. 387, 390 (1973).
"U.C.C.: The Farmer is Not a Merchant Under the U.C.C.—Promissory Estoppel to Avoid the Operation of the Statute of Frauds," Mark A. Buck, 16 W.L.J. 230, 237 (1976).
The uniform commercial code, the statute of frauds, and the farmer, 25 K.L.R. 318, 325 (1977).
Exceptions to statute of frauds, (K.S.A. 84-2-201), 26 K.L.R. 327, 331 (1978).
"Right of Secured Party to Recover Proceeds Commingled in Debtor's Bank Account," Kristen D. Balloun, 28, K.L.R. 325, 337 (1980).
"Commercial Law—Problems with Identifiable Proceeds and Transfers in Ordinary Course in Floor Plan Financing," Richard L. Cram, 30 K.L.R. 478, 480 (1982).
"Deregulation and Natural Gas Purchase Contracts: Examination Through Neoclassical and Relational Contract Theories," Danton B. Rice, Michael A. Schlueter, 25 W.L.J. 43, 59 (1985).
"The Holder of U.C.C. Section 3-407(2)(a) and the Windfall Discharge," Charles C. Lewis, 26 W.L.J. 27, 63 (1986).
CASE ANNOTATIONS
1. Signature may be made by agent, and law relative to principal and agent supplements code provisions. Leaderbrand v. Central State Bank of Wichita, 202 Kan. 450, 453, 450 P.2d 1.
2. Subrogation pursuant to surety contract not a "security interest" within meaning of statute. United States Fidelity & Guaranty Co. v. First State Bank, 208 Kan. 738, 749, 494 P.2d 1149.
3. No evidence agent lacked authority to endorse check; statutory presumption of genuineness of signatures as to authority becomes operative. Meador v. Ranchmart State Bank, 213 Kan. 372, 377, 380, 517 P.2d 123.
4. Mentioned in invoking doctrine of promissory estoppel concerning an oral sale of wheat. Decatur Cooperative Association v. Urban, 219 Kan. 171, 177, 547 P.2d 323.
5. Applied; error not to submit question of independent warranty to jury. Service Iron Foundry, Inc. v. M. A. Bell Co., 2 Kan. App. 2d 662, 671, 588 P.2d 463.
6. Principles of agency and estoppel applied. Cairo Cooperative Exchange v. First Nat'l Bank of Cunningham, 4 Kan. App. 2d 458, 463, 465, 608 P.2d 1370.
7. Discussed in dissenting and concurring opinion; bank held liable for breach of contract and conversion. Cairo Cooperative Exchange v. First Nat'l Bank of Cunningham, 228 Kan. 613, 621, 620 P.2d 805. Opinion modified and motion for rehearing denied: 229 Kan. 184, 624 P.2d 420.
8. Other principles of law supplement UCC except when displaced by specific provision of act. Johnson v. General Motors Corp., 233 Kan. 1044, 1046, 668 P.2d 139 (1983).
9. Principles of law and equity and other validating or invalidating causes remain unless displaced by UCC. Iola State Bank v. Bolan, 235 Kan. 175, 179, 679 P.2d 720 (1984).
10. Cited where depositary bank accepted from its depositor unendorsed check to third party; warranties and statute of limitations determined. Chilson v. Capital Bank of Miami, 237 Kan. 442, 447, 701 P.2d 903 (1985).
11. Trust law tracing principles applied; proceeds commingled with other funds retained identifiability. Bank of Kansas v. Hutchinson Health Services, Inc., 12 Kan. App. 2d 87, 92, 735 P.2d 256 (1987).
12. Code's concepts of rejection and revocation of acceptance do not preclude common law action for rescission. Perry v. Goff Motors, Inc., 12 Kan. App. 2d 139, 143, 736 P.2d 949 (1987).
13. Cited by dissent where court held creditor had no claim under Kansas law to liquidation sale proceeds commingled with other funds. Maxl Sales Co. v. Critiques, Inc., 796 F.2d 1293, 1301 (1986).
14. Cited; applicability of law and equity on unauthorized removal from state and sale of secured collateral examined. Farmers State Bank v. Production Cred. Ass'n of St. Cloud, 243 Kan. 87, 101, 755 P.2d 518 (1988).
15. UCC clearly does not affect common-law doctrines in Kansas unless it explicitly replaces them. Weidensaul v. Greenhouse Restaurant of Lawrence, Inc., 13 Kan. App. 2d 95, 97, 762 P.2d 196 (1988).
16. Doctrines of fraudulent concealment and equitable estoppel available to toll statute of limitations for breach of contract for sale of goods. Zuru Constructors, Inc. v. B.F. Goodrich Co., 746 F. Supp. 1051, 1055 (1990).
17. Purchase of company's assets through UCC article 9 foreclosure sale does not automatically preclude liability under common law theory of successor liability. Wells Fargo Vendor Financial Svcs., LLC v. Nationwide Learning, LLC, 56 K.A.2d 259, 269, 429 P.3d 221 (2018).