Sales and Leases | 39
of a sale of goods, but this fact alone was not reason to apply Article 2 to the loan. [ See Garfield v. Furniture Fair-Hanover , 274 A.2d 325 (N.J. Super. 1971).]
Note : Before the adoption of UCC Article 2A, many courts applied Article 2 to bailments and leases by analogy, or on the grounds that these transactions fit within the broader definition of transaction in goods. These days, Article 2A indisputably governs leases and bailments to the exclusion of Article 2. But even if the parties label a transaction as a lease or bailment, Article 2 will apply if the transaction is, functionally speaking, a sale. [2 Anderson U.C.C. §§ 2-105:70, 2-105:71 (3d. ed.), Westlaw (database updated Dec. 2020).] e. Laws Regulating Sales to Specified Classes of Buyers Article 2, by its terms, does not “impair or repeal any statute regulating sales to consumers, farmers[,] or other specified classes of buyers.” [U.C.C. § 2-102 (1951).] The upshot here is that, to the extent of any conflict between Article 2 and any of these more specific regulatory statutes, the regulatory statute controls. Although, Article 2 may still apply to matters that the regulatory statute does not address. [ S.W. Elec. Pwr. Co. v. Grant , 73 S.W.3d 211 (Tex. 2002).] Example : A homeowner unplugged a television from an electrical outlet. When she did, electric current jumped from the outlet and struck her hand, inflicting burns and other injuries. The homeowner sued the utility company, alleging negligence but not gross negligence. The relevant contract, which the state’s public utilities commission (commission) approved, provided that the utility company would be liable only for personal injuries resulting from its own gross negligence, not from simple negligence. Under UCC Article 2, such a limitation of liability was unconscionable and, thus, unenforceable. But under the state’s Public Utilities Regulatory Act (the act), contractual provisions that the commission approved were presumptively reasonable and, thus, enforceable. Here, UCC Article 2 conflicts with the act. Accordingly, the act controls, meaning the contractual limitation of liability is enforceable. [ Adapted from S.W. Elec. Pwr. Co. v. Grant , 73 S.W.3d 211 (Tex. 2002).] 3. Contracts for Services, Construction Contracts, and Hybrid Contracts Article 2 does not apply to contracts for services, nor to construction contracts. The common law of contracts normally controls these transactions. Oftentimes, though, a given contract will involve both (1) provision of services (or construction) and (2) a sale or provision of goods. A key issue here is whether UCC Article 2 or the common law applies to these so-called hybrid contracts. To this end, courts employ one of two tests: (1) the predominant-purpose test and (2) the gravamen-of-the-action test (gravamen test). Most courts seem to follow the
Made with FlippingBook - Online Brochure Maker