Goods and Services Flashcards
Transaction in Goods
UCC Artice II applies to transactions in goods. The UCC does not define the term transaction in goods. The transactions to which Article II applies are usually sales of goods. Though sometimes, Article II may apply to a transaction that is not a sale, transaction is a broader term than sale. A transaction in future goods is a transaction in goods.
Sale
the passing of title to goods from a seller to a buyer for a price
Good
all things which are moveable at the time of identification to the contract for sale (other than money, investments securities, and things in action)
Exception to Goods
A thing to be severed from realty can be a good, even if it is not moveable at the time of its identification to the contract.
What Does This Exception Cover?
Minerals, including oil and gas, to be removed from real estate
Structures to be removed from realty; and
Crops and other things attached to real property, including timber to be cut
How to Remove
For i and ii, to be removed from realty is a contract for the sale of goods but only if the seller (or one acting on the seller’s behalf) is the one doing the severing.
—-If the buyer does the severing, then the contract is considered a contract affecting land, not one for the sale of goods
For iii, can be removed without material harm to the land
Services
Article II does not apply to contracts for services, common law of contracts normally controls these transactions
Sometimes a contract will have both, being a hybrid contract. The key issue then is whether UCC Article 2 or the common law applies to the contract.
Courts employ one of two tests: the predominant-purpose test and the gravamen test
Predominant Purpose Test Explaination
asks whether the contract’s predominant purpose is the sale of goods or rendition of services.
Good with services incidental = UCC; Services with goods incidental = common law
Predominant Purpose Test
Courts consider several factors in applying PPT, including
- The language of the contract
—-Ex. Goods language= transaction is a purchase, buyer/customer and seller, subject matter of the contract as goods, product, or equipment - The nature of the business of the supplier of goods and services
—-Ex. Main thrust of seller’s business - The reason the parties entered into the contract, and
—-Ex. Final product that the purchaser sought to receive by entering the contract - The amount paid for the rendition of the services and goods, respectively
Gravamen Test
looks to the primary focus of the plaintiff’s complaint; looks to whether the harm resulted from the goods or the services involved in the mixed transaction
If plaintiff’s allegations emphasize defective goods, then UCC Article II governs only to the goods, even if the contract is primarily one for services
Conversely, if the plaintiff’s allegations emphasize the quality of any services or labor, the common law applies even if the contract is mainly one for goods
Merchant
a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction
Two Kinds of Merchants
Merchants concerning the practices involved in the transaction
Merchants with respect to goods of the kind
Merchants Concerning the Practices Involved in the Transaction
Virtually any professional businessperson acting in her business capacity could be considered a merchant concerning the practices involved in the transaction
almost every person in business would, therefore, be deemed to be a “merchant” under the language “who . . . by his occupation holds himself out as having knowledge or skill peculiar to the practices . . . involved in the transaction . . .” since the practices involved in the transaction are non-specialized business practices such as answering mail.
Even if a person lacks such knowledge or skills, they may be imputed to them if they employ an agent or broker who, by his occupation, holds himself out as having that knowledge or skill.
Merchants with Respect to Goods of the Kind
More narrow
Refers to someone with professional experience and expertise in the particular goods that are the subject of the transaction
Will normally be one who sells the particular kind of goods in a professional capacity – substantial part of their occupation
Continuous, regular, systematic dealing in the goods
Farmers
Some courts = no
Other courts = yes if the farmer is regularly and systematically sells crops as a meaningful part of their occupation more likely than a farmer who sells casual, isolated, or sporadic sales
