The UCC imposes a higher standard of good faith on merchants than on nonmerchants.

Question

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The UCC imposes a higher standard of good faith on merchants than on nonmerchants, as merchants are expected to have greater experience and knowledge in commercial transactions. This is reflected in various provisions throughout the UCC, such as the obligation to act in good faith in the performance and enforcement of contracts (UCC § 1-304) and the duty to deal fairly in any transaction (UCC § 2-103).

The UCC Imposes a Higher Standard of Good Faith on Merchants