Contracts/sales: What law governs the transaction?

Question 1

If a contract is solely for the sale of goods

i.e., tangible, movable items

Answer 1

UCC Article 2 governs the transaction, regardless of whether the parties are merchants or non-merchants.

However, many of the important UCC rules (14 in total) apply only to contracts in which at least one of the parties is a merchant.

Article 2 covers the sale of ordinary goods (a suit off the rack) and custom-made goods (a tailor-made suit).

Question 2

If the contract involves only non-goods

i.e., real estate, services, or intangibles

Answer 2

the common law governs the transaction

Question 3

If the contract involves BOTH goods and non-goods

Answer 3

the predominant (a/k/a primary or dominant) purpose of the contract governs. The predominant purpose test is an all-or-nothing test; thus

if the predominant purpose of the contract is goods, the UCC governs the entire contract

if the predominant purpose of the contract is non-goods, the common law governs the entire contract

Question 4

Predominate Purpose test

Answer 4

To determine the predominant purpose of a mixed transaction, courts examine:

(1) the language of the parties’ contract
(2) the nature of the business of the supplier of the goods and non-goods (e.g., service)
(3) the reason the parties entered into the contract (i.e., what each bargained to receive)
(4) the respective amounts charged under the contract for goods and for non-goods