Click for Video: Contracts: UCC 2-104 Merchants
by Emerson Stafford
From Emerson’s Bar Review, a video lecture on how to analyze who a merchant is under UCC 2-104, Contract law.
Excerpt from: SCOPE OF ARTICLE 2
This ambiguity concerning the meaning of “transactions in goods” leads to a problem under current law in another respect: whether Article 2 should be applied in a so-called “mixed” transaction. Contracts often involve both the sale of goods and the service or installation of the goods sold. When the transaction is mixed, the courts apply one of two tests: the predominate purpose test (majority view) or the gravamen test (minority view).
Under the predominate purpose test, the court determines whether the predominate purpose of the transaction is to sell the goods or to provide the service. If the predominate purpose is to sell the goods, Article 2 applies. If the predominate purpose is to provide the service, Article 2 does not apply. To determine whether the predominate purpose is to provide the goods or the service, courts generally look at the predominate component in the transaction. To determine what is the predominate component, courts examine many factors including the terminology of the contract, the objective of the parties in entering the contract, the ratio of the price of the goods to the whole price of the contract, the nature of the business of the supplier, and the intrinsic value of the goods without the service.
In contrast, under the gravamen test, the court looks at the basis of the complaint rather than the overall nature of the transaction. If the plaintiff is complaining about the goods component, Article 2 applies. If the plaintiff is complaining about the service component,Article 2 is inapplicable.
Paper discussing the problems posed by software transactions
Leonard v. Pepsico Inc. 88 F Supp 2d 116 (2014)
The following links and introductory text are straight out of the teacher’s manual for our textbook.
(1) This is the commercial at issue in Leonard – 7 million Pepsi Points for the Harrier Jet (10/30/95): https://www.youtube.com/watch?v=ZdackF2H7Qc
(2) A later commercial increases the number of Pepsi Points for the Harrier Jet to 700 million (3/18/96): http://www.youtube.com/watch?v=Ln0VSA9UJ-w&NR=1
(3) The third commercial adds in brackets, “(JUST KIDDING)”: https://www.youtube.com/watch?v=Z4TQmazYyCU
There is a CBS news interview of Leonard at: https://www.youtube.com/watch?v=h7XliS0DYRo