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Chametz And The California UCC

Nissan Is Both A Car Maker And A Month

The Jewish holiday of Passover (Pesach) begins at sundown this evening.  The holiday lasts for 8 days until April 16 (from the 15th of the Jewish month of Nissan until the 22nd of Nissan).

In preparation for Passover, observant Jews must dispose of absolutely all chametz, which is basically any food that is made with grain and water that has been allowed to leaven (rise).  One way to dispose of chametz, which is also spelt chometz, is to sell it to a non-Jew and then buy it back after the holiday.  Under this option, the parties enter into an actual written contract.

Thus, I began wondering about the secular legal implications of these contracts.  After all, it is possible that disputes could arise.  For example, who bears the risk of loss if the chametz is destroyed in a fire or other calamity?  What if one party fails to perform?  It seems, however, that the disputes are are rare.  I could find only a handful of U.S. cases that make any mention of chametz, and those cases involved prisoner complaints about being fed chametz. 

As a matter of California law, it seems to me that the sales of chametz are potentially governed by, among other things, Division 2 of the California Commercial Code which governs the sale of goods.  Section 2105 defines "goods", with certain exceptions, as all things (including specially manufactured goods) that are movable at the time of identification of the contract for sale.  Most items of chametz (fine scotch, bread, beer, cookies, etc.) clearly fit within this definition.  See, e.g., Webster v. Blue Ship Tea Room, Inc., 347 Mass. 421, 198 N.E.2d 309 (1964) (applying the UCC to fish chowder).

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...