Sales and Leases | 40
predominant-purpose test. [ Audio Visual Artistry v. Tanzer , 403 S.W.3d 789 (Tenn. 2012); Pass v. Shelby Aviation, Inc. , No. W1999-00018-COA-R9-CV, 2000 WL 388775 (Tenn. Ct. App. Apr. 13, 2000).] a. Predominant-Purpose Test To determine whether UCC Article 2 applies to a hybrid contract, most courts employ the so-called predominant-purpose test. This test asks whether the contract’s predominant purpose is the sale of goods or the rendition of services. If the transaction is primarily a sale of goods with labor involved only incidentally, then Article 2 will apply despite the service element. Conversely, if the transaction is mainly one for services, with provision of goods only incidentally involved, then Article 2 will not apply—even though some element of the transaction may embrace a sale of goods. The contractual language, along with how the parties label the transaction, does carry some weight, but it is not necessarily dispositive. [ Audio Visual Artistry v. Tanzer , 403 S.W.3d 789 (Tenn. 2012).]
b. Factors in Applying Predominant-Purpose Test Courts consider several factors in applying the predominant-purpose test, including:
the contractual language, the nature of the seller’s business,
the final product the purchaser entered the bargain to receive, and the amount charged for goods v. the amount charged for services.
[ Audio Visual Artistry v. Tanzer , 403 S.W.3d 789 (Tenn. 2012).]
Contractual Language as a Factor in the Predominant-Purpose Test In applying the predominant-purpose test, courts generally look to contractual language indicating (1) the parties’ performance and (2) their relationship to each other. To that end, certain language in a contract can make it more or less likely that a court will find the contract to be predominantly one for goods, as opposed to one for services. For instance, a transaction in goods is more likely if the contract refers to the transaction as a purchase; the parties as buyer (or customer) and seller; or the subject matter of the contract as goods, product, or equipment. Of course, contractual language alone is not dispositive. [ Audio Visual Artistry v. Tanzer , 403 S.W.3d 789 (Tenn. 2012).] Nature of the Seller’s Business as a Factor in the Predominant-Purpose Test In the predominant-purpose test, the nature of the seller’s business is an important factor. If the main thrust of the seller’s business is providing goods ( e.g. , selling,
Made with FlippingBook - Online Brochure Maker