PCL 1L Contracts

From The ABCs of the UCC (Revised) Article 2: Sales.

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

Installation Failure: How the Predominant Purpose Test Has Perpetuated Software’s Uncertain Legal Status Under the Uniform Commercial Code