Sales.

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Date: Fall 2021
From: Business Lawyer(Vol. 76, Issue 4)
Publisher: American Bar Association
Document Type: Article
Length: 8,068 words
Lexile Measure: 2690L

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SCOPE OF ARTICLE 2

Article 2 of the Uniform Commercial Code ("U.C.C.") applies to "transactions in goods" (1) and defines "goods" to include all things that are "movable at the time of identification to the contract." (2) Courts tend to read section 2-102 more narrowly than its text, by applying Article 2 to present sales of goods and to contracts for the future sale of goods. (3)

In mixed-sales transactions, such as those involving goods and services, courts often apply a predominant purpose test. Under this test, Article 2 applies if the transaction is predominantly for the sale of goods, but it does not apply if the transaction is predominantly for the provision of services. (4) The application of this test is illustrated by an interesting case decided since the publication of the last survey.

In Salt Lake City Corp. v. Sekisui SPR Americas, LLC, (5) the court considered, among other things, whether the U.C.C. applied to a contract between Salt Lake City Corporation ("Salt Lake City") and Southwest Pipeline and Trenchless Corporation ("Southwest") whereby Southwest agreed to rehabilitate a sewer line using a liner in the existing pipe. (6) A dispute developed when the sewer pipe liner leaked, and repair was unsuccessful. (7) Salt Lake City brought suit for breach of contract against Southwest and its suppliers, and Southwest asserted cross-claims for breach of contract and other claims against the suppliers. (8) In deciding the motions, the court considered whether the U.C.C. should apply to the transaction when the contract arguably involved goods and services. (9) The court noted that "[t]he majority of courts have adopted the one-law approach, which applies the UCC to the entire contract if it is predominately a contract for goods," but that some courts have applied a "gravamen test, which permits a court to apply the U.C.C. to disputes concerning a goods portion of a hybrid contract and the common law to disputes concerning a services portion of the contract." (10) The court concluded that the predominant purpose test applied, at least with respect to the determination of the statute of limitations, but that the determination could not be made on a motion for judgment on the pleadings where the court did not have key information about the negotiation of the contract or the cost or value of the goods and services sold. (11)

STATUTE OF FRAUDS

To be enforceable, an agreement to buy and sell goods for a price of $500 or more must normally be evidenced by one or more signed writings unless an exception applies. (12) In TreeHouse Foods, Inc. v. SunOpta Grains & Foods Inc., (13) the court considered a claim by TreeHouse Foods, Inc. ("TreeHouse") regarding the formation of a contract for the purchase of sunflower kernels from SunOpta Grains & Foods, Inc. ("SunOpta"). (14) After there was a recall of the kernels due to Listeria, TreeHouse brought suit for breach of contract, SunOpta counter-claimed, and both parties moved for summary judgment. (15) SunOpta asserted that there were five...

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Gale Document Number: GALE|A681135809