1. (T/F) The scope of Article 2 includes secured transactions, i.e. those in which the seller retains a security interest in the goods.

1. False. 2-102.

2. (T/F) “Goods” include all things which are movable at the time of contract formation.

2. True 2-105(1).

3. Andy owns a hot dog cart in Balboa Park. He has a license from the park authority to operate the stand at a very visible and busy location in front of one of the museums. Andy contracts to sell the hot dog stand business, including the cart, the inventory, and the license, to Bill. Bill repudiates. At a subsequent trial for damages, which portions of the sale (i.e., the cart, the inventory, the license) will be governed by Article 2?

3. The answer depends on the local case law. By 2-102, Article 2 “applies to transactions in goods.” 2-105(1) defines “goods” as “all things...which are movable at the time of identification to the contract.” 2-501(1)(a) defines “identification” as occurring “when the contract is made if it is for the sale of goods already existing and identified.” Here, the “goods” are the cart and the inventory, but not the license. The license is an intangible. And since the goods were in existence at the time of contract formation, they have been identified to the contract, and movable at the time of identification to the contract. Some courts will use the “primary purpose” test to determine whether the entire contract is governed by Article 2. Here, the intent of the parties appears to be more than the sale of goods because the hot dog cart and the hot dogs themselves are worthless without the license to sell them in the lucrative location. In such a case, the sale of the cart and inventory would be viewed as “incidental” to the sale of the intangibles. However, other courts have broken the transaction down into component parts. In that case, Article 2