Louisiana is the only state that has not adopted UCC Article 2, so sales of goods are still governed by the Louisiana Civil Code while nearly every other part of the Uniform Commercial Code applies as it does elsewhere. The Louisiana UCC, found in Title 10 of the Revised Statutes, covers secured transactions, negotiable instruments, leases, bank deposits, funds transfers, letters of credit, documents of title, and investment securities. What that means in practice: if you’re buying or selling goods in Louisiana, look to the Civil Code; if you’re financing, securing, or moving those goods through the banking system, look to Title 10.
Which UCC Articles Louisiana Has Adopted
Louisiana has enacted Articles 1 (General Provisions), 2A (Leases), 3 (Negotiable Instruments), 4 (Bank Deposits and Collections), 4A (Funds Transfers), 5 (Letters of Credit), 7 (Documents of Title), 8 (Investment Securities), and 9 (Secured Transactions). All of these appear in Louisiana Revised Statutes Title 10.
Article 2, covering sales of goods, is the one Louisiana rejected. The Civil Code already contained a developed body of sales law drawn from French and Spanish traditions, and rather than replace it, the legislature left sales under the Civil Code and grafted the remaining UCC articles onto that framework. Contract formation, warranty rules, and breach remedies for sales in Louisiana therefore look different from what you’d find in Texas or Mississippi.
Sales of Goods Under the Civil Code
Because Article 2 does not apply, sales are governed by Civil Code rules. Article 1983 sets the foundation: contracts have the effect of law between the parties and must be performed in good faith.1Justia. Louisiana Civil Code Article 1983 – Law for the Parties; Performance in Good Faith Once a sale is agreed, both sides are bound as firmly as if a statute imposed the obligation.
Warranties follow the Civil Code as well. Louisiana’s redhibition doctrine provides an implied warranty against hidden defects in every sale. If a defect makes the thing sold useless, or so inconvenient that the buyer would not have purchased it at that price, the buyer can seek to dissolve the sale or reduce the price. Waivers of this implied warranty are permitted but must be clear and unambiguous. This operates independently of the UCC’s implied warranty of merchantability used in other states.
Leases of goods are a hybrid. Louisiana did adopt UCC Article 2A on leases,2Legal Information Institute. UCC Article 2A – Leases but Civil Code Article 2696 also imposes a warranty that the leased thing is suitable for its intended purpose and free of defects, including defects that arise after delivery.1Justia. Louisiana Civil Code Article 1983 – Law for the Parties; Performance in Good Faith Courts apply both bodies of law to lease disputes, which can give lessees broader protection than Article 2A alone.
Contract Formation Rules That Differ
Three formation issues catch out-of-state parties off guard.
No consideration required. Under Civil Code Article 1927, a contract is formed by the consent of the parties through offer and acceptance, expressed orally, in writing, or by conduct clearly indicating agreement. Every other state requires some form of consideration. In Louisiana, a promise can be binding without a reciprocal exchange, as long as both parties genuinely consented.
A different statute of frauds. The UCC’s Section 2-201 rule requiring a writing for sales of $500 or more does not apply here,3Cornell Law School Legal Information Institute. Uniform Commercial Code 2-201 – Formal Requirements; Statute of Frauds because Article 2 is not adopted. Civil Code Article 1846 controls instead: an oral contract valued at $500 or less can be proved by any competent evidence, while one exceeding $500 must be proved by at least one witness and other corroborating circumstances.4Justia. Louisiana Civil Code Article 1846 – Contract Not in Excess of Five Hundred Dollars Oral contracts above $500 can still be enforced with a witness and supporting evidence, rather than being void for lack of a signed writing.
Battle of the forms. UCC Section 2-207 lets additional terms in a merchant’s acceptance become part of the contract. Civil Code Article 1943 takes the opposite approach: an acceptance that does not match the offer is a counteroffer.5Louisiana State Legislature. Louisiana Civil Code Article 1943 – Acceptance Not in Accordance With Offer No contract forms until one side accepts the other’s terms without modification. Conflicting purchase orders and invoices are more likely to result in no binding contract at all.
Secured Transactions and Movable Property
Louisiana adopted UCC Article 9, so the basic framework for creating and enforcing security interests in personal property is the same as elsewhere. A security interest attaches when the creditor gives value, the debtor has rights in the collateral, and an authenticated security agreement describes the collateral. On default, the creditor can seize and sell the collateral.
The critical wrinkle is how Louisiana classifies property. The Civil Code draws a sharp line between movable and immovable property, terms unfamiliar to common law states, which speak of personal and real property. UCC Article 9 applies only to movable property: equipment, inventory, accounts receivable, vehicles, and similar assets. Security interests in immovable property such as land and buildings are governed by Louisiana mortgage law under the Civil Code and Title 9 of the Revised Statutes. Louisiana mortgages must be notarized and recorded in the parish land records, a system entirely separate from UCC filings.
The Civil Code also retains the concept of a pledge under Articles 3141 through 3175, giving a creditor a security right in movable property through actual or constructive delivery of the collateral. Article 3133 establishes a broader principle: an obligor who is personally bound for an obligation must fulfill it from all of their property, movable and immovable, present and future.
Where to File a UCC-1 in Louisiana
This is the single most important operational difference for out-of-state creditors. In Louisiana, UCC-1 financing statements are filed with one of the state’s 64 parish Clerks of Court, not with the Secretary of State.6Louisiana Secretary of State. Get Forms and Fee Schedule – Uniform Commercial Code Filing in the wrong location can leave the security interest unperfected and behind other creditors in priority.
The financing statement must include the debtor’s legal name, the secured party’s name, and a description of the collateral. Louisiana strictly enforces accuracy in the debtor’s name under Revised Statutes 10:9-503. An error that makes the filing impossible to find in a standard search can render the entire filing ineffective, leaving the creditor unsecured despite going through the process.7Justia. Louisiana Revised Statutes 10:9-503 – Name of Debtor and Secured Party
A standard UCC-1 for a single debtor costs $30, which includes a $5 prepaid termination fee. Adding a second debtor costs $10 more. Fixture filings and transmitting utility filings run from $40 to $215.6Louisiana Secretary of State. Get Forms and Fee Schedule – Uniform Commercial Code A filed financing statement is effective for five years. To keep it alive, the creditor must file a continuation statement in the six months before expiration; miss that window and the filing lapses, unperfecting the interest.8Justia. Louisiana Revised Statutes 10:9-515 – Duration and Effectiveness of Financing Statement
Purchase-Money Security Interest Timing
A purchase-money security interest, or PMSI, arises when a lender finances the purchase of specific collateral. Under Revised Statutes 10:9-324, a PMSI in goods other than inventory or livestock takes priority over earlier-filed security interests covering the same type of collateral, as long as the PMSI is perfected when the debtor receives the goods or within 20 days afterward.9Justia. Louisiana Revised Statutes 10:9-324 – Priority of Purchase-Money Security Interests Even a creditor with a years-old blanket lien on all the debtor’s equipment can be jumped by a PMSI lender on the specific equipment it financed.
For inventory, the rule is tighter. A PMSI in inventory only achieves priority if it is perfected before the debtor receives the inventory and the PMSI holder sends written notice to any existing secured creditor with a filing covering that type of inventory. The existing creditor must receive that notice before the debtor takes possession.10Legal Information Institute. UCC 9-324 – Priority of Purchase-Money Security Interests Skip the notification and the priority advantage is lost.
Negotiable Instruments
Louisiana adopted UCC Article 3, so promissory notes, checks, and drafts follow the standard framework. To qualify as negotiable, an instrument must contain an unconditional promise or order to pay a fixed amount of money, be payable to a specific person or to bearer, and be payable on demand or at a definite time. An instrument that fails any of these tests is just a contract and carries none of the special protections of negotiability.
Transfers follow Revised Statutes 10:3-201. For an instrument payable to a named person, negotiation requires both physical transfer of the instrument and the holder’s endorsement. An instrument payable to bearer can be negotiated by transfer of possession alone.11Justia. Louisiana Revised Statutes 10:3-201 – Negotiation
A holder in due course, meaning someone who takes an instrument for value, in good faith, and without knowledge of defects, receives enhanced protection against most defenses the original maker could raise. In employee fraud cases, Revised Statutes 10:3-405 places liability on the employer whose employee committed the fraudulent endorsement rather than on downstream holders who took without knowledge of the problem.12Justia. Louisiana Revised Statutes 10:3-405 – Employer’s Responsibility for Fraudulent Indorsement by Employee
Remedies When a Deal Falls Apart
The available remedies depend on the type of transaction.
For sales of goods, Civil Code Article 1994 makes a party who fails to perform liable for damages caused by nonperformance, defective performance, or delay.13FindLaw. Louisiana Civil Code Article 1994 – Obligor Liable for Failure to Perform A party acting in good faith is liable only for foreseeable damages. Under Article 1997, an obligor who breaches in bad faith is liable for all damages that are a direct consequence of the failure, including damages that were not foreseeable when the contract was made.
For secured transactions, Article 9 governs enforcement. After default, the secured party can repossess and dispose of the collateral through a commercially reasonable sale, lease, or other disposition.14Louisiana State Legislature. Louisiana Revised Statutes 10:9-610 – Disposition of Collateral After Default Revised Statutes 6:966 permits self-help repossession without a court order, provided the creditor can take possession without breaching the peace.15Justia. Louisiana Revised Statutes 6:966 – Procedure Before using self-help, the secured party must send written notice to the debtor at their last known address, informing them of the creditor’s right to repossess without further notice upon default. The disposition must be commercially reasonable in every respect, and the debtor is entitled to any surplus after the debt and expenses are satisfied.
For negotiable instruments, a holder can seek payment from the maker, drawer, or endorsers. Louisiana courts apply the Article 3 framework alongside Civil Code defenses such as fraud and error.
Farm Products: A Federal Override
Louisiana’s agricultural economy makes one federal rule especially important. Under standard Article 9, a buyer of farm products ordinarily takes them subject to any perfected security interest the farmer created. The federal Food Security Act of 1985 reverses that: a buyer who purchases farm products in the ordinary course of business from a seller engaged in farming takes free of any security interest created by the seller, even if the buyer knows the interest exists.16Office of the Law Revision Counsel. 7 USC 1631 – Protection for Purchasers of Farm Products
Louisiana has established a central filing system for farm products that creates exceptions to the buyer’s protection. A buyer who fails to register with the system can take subject to a security interest listed on the master list maintained by the operator. The system operator must be able to provide oral confirmation of any effective financing statement within 24 hours of a request, followed by written confirmation.17eCFR. 9 CFR Part 205 – Clear Title; Protection for Purchasers of Farm Products For anyone buying agricultural commodities in Louisiana, registering and checking for existing security interests before purchase is the only reliable way to avoid paying twice for the same crop or livestock.
Electronic Signatures
The federal E-SIGN Act ensures that electronic signatures, contracts, and records cannot be denied legal effect solely because they are in electronic form, and it applies to Louisiana commercial transactions the same as anywhere else.18Office of the Law Revision Counsel. 15 USC 7001 – General Rule of Validity An electronically signed security agreement, financing statement, or sales contract carries the same legal weight as a paper original, provided it can be accurately retained and reproduced.
For documents requiring notarization, including Louisiana mortgages on immovable property, E-SIGN permits electronic notarization as long as the electronic signature of the authorized notary, along with all required information, is attached to or logically associated with the record.18Office of the Law Revision Counsel. 15 USC 7001 – General Rule of Validity Consumer transactions carry an additional requirement: the consumer must affirmatively consent to electronic records after being informed of the right to receive paper copies and the procedure for withdrawing consent.