Under UCC 2-105, the definition of goods covers all things that are movable at the time they are identified to the contract for sale. That single test — physical movability at the moment the seller designates specific items for the buyer — determines whether Article 2 of the Uniform Commercial Code governs the transaction or whether the parties fall back on common-law contract rules. The definition is narrower than most people assume, and several categories that feel like “stuff you can buy” sit outside it.
Qualifying as goods matters because Article 2 supplies a full default framework: warranties, delivery terms, risk of loss, and remedies for breach. If the item isn’t a good, none of that applies.1Legal Information Institute. UCC 2-105 – Definitions: Transferability; Goods; Future Goods; Lot; Commercial Unit
The Movability Test and Identification
“Movable” is the plain, practical question: can the item physically be transported at the moment the contract pinpoints it? A house bolted to a foundation isn’t movable, so its sale is a real property transaction governed by different law. A prefabricated shed sitting on a lot, ready to be loaded onto a truck, is a good.
“Identified to the contract” means the seller has designated specific items as the ones that will fulfill the deal. A retailer pulling a particular laptop off a shelf for your order is identification. A manufacturer assigning a serial-numbered engine to your purchase order is identification. Until that designation happens, the items are abstract, and the buyer has no property interest in them.
Identification is also when the buyer first acquires a real stake. Under UCC 2-501, the buyer gains a “special property” and an insurable interest the moment existing goods are identified to the contract, even if those goods turn out to be defective or the buyer still has the right to reject them.2Legal Information Institute. UCC 2-501 – Insurable Interest in Goods; Manner of Identification of Goods That is what lets a buyer insure goods still sitting in the seller’s warehouse.
What the Definition Includes Beyond Ordinary Items
The statute pulls several less obvious categories inside the goods definition.1Legal Information Institute. UCC 2-105 – Definitions: Transferability; Goods; Future Goods; Lot; Commercial Unit
Specially manufactured goods. Custom-machined industrial parts, a wedding dress altered to unique specifications, software embedded in a device built to your design — all count as goods once they become movable. The fact that they were made to order doesn’t push them outside Article 2. This matters most when deals fall apart. Normally a sale of goods worth $500 or more needs a signed writing under the statute of frauds, but specially manufactured goods get an exception: if the items aren’t suitable for resale to anyone else and the seller has already started production or committed to materials before the buyer walks, the contract is enforceable even without a writing.3Legal Information Institute. UCC 2-201 – Formal Requirements; Statute of Frauds
Future goods. Items that don’t yet exist or haven’t been identified are “future goods.” No ownership interest passes until goods are both existing and identified. A contract to buy next season’s wheat crop or a batch of widgets the factory hasn’t produced yet is a contract to sell, not a present sale. The buyer owns nothing yet, can’t insure the goods yet, and bears none of the risk of their loss until identification occurs.
Unborn animals and growing crops. The statute specifically brings these inside the definition. A rancher can contract to sell calves before they’re born; a farmer can lock in a price for a corn crop still in the ground. These items will eventually be separated from the land or the parent animal and transported on their own, so the statute treats them as movable by nature. Under UCC 2-501, identification of unborn animals occurs when they are conceived, and identification of crops occurs when planted or when they begin growing, as long as birth or harvest will happen within twelve months of contracting or by the next normal harvest season.2Legal Information Institute. UCC 2-501 – Insurable Interest in Goods; Manner of Identification of Goods
Things severable from land. UCC 2-107 draws a line based on who does the removing.4Legal Information Institute. UCC 2-107 – Goods to Be Severed From Realty: Recording For minerals, oil, gas, and structures, the sale qualifies as a goods transaction only if the seller severs them from the land; until severance, a purported present sale operates only as a contract to sell. For crops, timber, and other things removable without material harm, the sale qualifies as a goods transaction whether the buyer or the seller does the severing, and the parties can identify the goods and complete a present sale before severance even happens.
What’s Excluded
Three categories are carved out of the goods definition entirely.
Money used as payment. Currency exchanged to pay the purchase price is excluded because it functions as a medium of exchange, not a product. When money itself is the commodity being traded, though, it can qualify as a good. Rare coins, foreign currency bought for its own value, and collectible banknotes are goods, because the buyer wants the item itself rather than its spending power.
Investment securities. Stocks, bonds, and similar instruments are excluded because UCC Article 8 governs them, with its own rules for transfer, ownership, and security interests.
Things in action. These are intangible legal rights you can enforce through a lawsuit: the right to collect a debt, an insurance claim, a patent, a copyright. None of them are movable physical objects, so they fail the core movability test. The exclusion sweeps broadly across intellectual property: patents, copyrights, trademarks, and trade secrets are all enforceable rights rather than tangible objects. Selling a patent is not a sale of goods, even though the patent may be worth millions. The physical medium carrying intellectual property, like a book or a USB drive, can be a good, but the rights themselves cannot.
Mixed Goods and Services Contracts
Many real-world deals bundle goods with services, and the statute doesn’t address these hybrids directly. A contractor who installs a new HVAC system is selling you both equipment and labor. A dentist fitting a crown provides both a custom-made product and professional services. Whether Article 2 applies depends on which element dominates.
Most courts use the “predominant purpose test,” which originated in the Eighth Circuit’s 1974 decision in Bonebrake v. Cox. The question is whether the main thrust of the contract is the sale of a product (with labor incidentally involved) or the delivery of a service (with goods incidentally involved). Courts weigh contract language, the supplier’s type of business, why the parties entered the deal, and the cost of goods relative to the total price. If goods predominate, the entire contract falls under Article 2. If services predominate, common-law contract rules apply instead.
A minority of courts apply the “gravamen test,” which looks at the specific part of the deal that’s actually in dispute rather than characterizing the whole contract. If the complaint is about defective goods, Article 2 governs that claim even if the overall contract is primarily for services. The test avoids all-or-nothing results but is less predictable, since it can shift based on what goes wrong.
Software and Digital Assets
The statute was drafted with physical objects in mind, and courts have struggled to fit newer products into it. The most common question is whether software qualifies as a good.
Case law generally draws a line between off-the-shelf software and custom-developed software. Shrink-wrapped programs sold to any buyer, whether downloaded or on physical media, are frequently treated as goods because they’re standardized products. Custom software built to a particular buyer’s specifications is often classified as a service, particularly when the buyer is really paying for the developer’s expertise and the code is incidental. Courts in these cases typically apply the predominant purpose test.
Cryptocurrency and other digital assets present a newer challenge. The 2022 amendments to the UCC added Article 12, which creates a framework for “controllable electronic records,” a category covering assets like Bitcoin, Ether, and NFTs. These are treated as intangible property rather than goods under Article 2. Over 30 states have adopted the amendments so far. Where Article 12 hasn’t been enacted, digital assets generally fall into the “things in action” or general intangibles category and stay outside Article 2’s reach either way.
Electricity is another gray area. Courts are split on whether it qualifies as a movable good. Some treat electricity delivered through a utility’s infrastructure as a good subject to Article 2 warranties; others view it as a service. There’s no uniform answer across jurisdictions.
Partial Interests, Fungible Bulk, Lots, and Commercial Units
UCC 2-105 contains several subdefinitions that come up constantly in commercial disputes.
You don’t have to buy a whole item for Article 2 to apply. Subsection (3) allows the sale of a partial interest in existing, identified goods. Two businesses can co-own a piece of heavy equipment, and the sale of one partner’s share is a sale of goods.
Fungible goods get special treatment. These are items where any unit is interchangeable with any other: grain in a silo, oil in a tank, lumber of the same grade. Under subsection (4), a buyer can purchase an undivided share of a bulk quantity by proportion, weight, or measure, and the buyer becomes a co-owner of the mass based on the amount purchased. Commodity markets depend on this rule; nobody needs to bag up a buyer’s exact share of 10,000 bushels of wheat before the sale is valid. If the bulk turns out to hold less than the seller contracted to deliver, the buyer is entitled to whatever quantity exists, and the seller owes damages for the shortfall.
A “lot” is a single article or parcel that’s the subject of a separate delivery. If your contract calls for ten monthly shipments, each shipment is its own lot. The buyer’s rights to accept or reject are evaluated lot by lot, not for the contract as a whole.
A “commercial unit” is a grouping that trade practice treats as a single whole, where splitting it up would damage its value or usefulness. A suite of furniture, a carload of raw material, a matched set of components, or even a single machine can each be a commercial unit. The key consequence: if a buyer accepts any part of a commercial unit, they’re generally treated as having accepted the entire unit. You can’t cherry-pick three chairs from a dining set and reject the fourth. Industry custom and market practice define these groupings, not the parties’ preferences, which keeps the standard objective.
Why the Classification Matters
Getting the goods question right determines the entire legal framework around the deal. If the item qualifies, Article 2 supplies the implied warranty of merchantability, the implied warranty of fitness for a particular purpose, a workable statute of frauds, rules on cure and rejection, and a defined pathway for risk of loss. The buyer can insure the goods from the moment of identification. Specially manufactured items are enforceable even without a signed writing. Fungible bulk can be sold without physical separation. Commercial units stay together for acceptance purposes.
If the item doesn’t qualify — because it’s a service, an intangible right, a security, or real property — none of those defaults apply. The parties are back on common-law contract principles, which generally offer thinner protection and more uncertainty. That is why the first question in any sales dispute is whether what was sold is a good under 2-105 at all.