Academic journal article St. Thomas Law Review

Mixed Transactions for Goods and Services: The Need for Consistency in Choosing the Governing Law

Academic journal article St. Thomas Law Review

Mixed Transactions for Goods and Services: The Need for Consistency in Choosing the Governing Law

Article excerpt

INTRODUCTION

Imagine you are about to lose your home insurance after your provider contacted you stating that all homes with a pool are required to have a fence around the property. (1) You quickly find a company that sells and installs fences and enter into a contract with them. (2) You pay a fortune for the fence, but your insurance is saved. (3) Shortly thereafter, the fence proves to be faulty, and the company refuses to fix the problem. (4) Now, you sue under certain warranties that are provided by the Uniform Commercial Code ("U.C.C."), but the court finds that the U.C.C. does not apply to your dispute and that the warranty you wish to sue under is not available under common law. (5) Although you argued that the U.C.C. applies to your case based on prior cases providing that the sale and installation of a fence falls under the U.C.C. as a sale of goods, the court disagrees and finds that the contract seems to be mainly for services, falling under common law. (6) Should there be a better standard for the court to apply in sale of goods and services transactions or is it fair that you are barred from recovery when others in your situation have been able to recover based on similar facts? (7)

This comment begins by discussing the background of the U.C.C. and the predominant purpose doctrine in Part II. (8) Part III of this comment examines the various tests courts have used to determine the governing law of a transaction. (9) Further, Part III.a considers the method of separating the transaction. (10) Part III.b details the application of the U.C.C. to any mixed contract. (11) Part III.c provides a discussion of the gravamen standard, which some courts use as their method of choice. (12) Lastly, Part IV discusses the need for a uniform standard in these situations, provides a view of a recent case where the court developed an efficient set of factors to be applied, and argues how to make those factors even more effective in order to promote widespread adherence to one standard, which will create consistent and just outcomes in cases of tricky mixed transactions. (13)

I. BACKGROUND OF ARTICLE 2 AND THE PREDOMINANT PURPOSE TEST

The National Conference of Commissioners on Uniform State Laws, now known as the Uniform Law Commission ("ULC"), works to create uniform state laws for areas of the law where consistency is needed. (14) The ULC is nonprofit and has existed for more than a century, as it was established in 1892 and is now the oldest state government association. (15) The commission has always worked closely with the American Bar Association and consists of state commissioners from each state in the United States. (16) These commissioners are lawyers, law professors, judges, and legislators, who have passed their state bar exam and have been selected by state governments. (17) When there are various laws governing an area of law, the ULC drafts a set of laws to be used as a replacement, which will achieve consistency and uniformity in the law to be applied throughout the various jurisdictions that choose to adopt the ULC's laws. (18)

One of the reasons for creating this consistency is the fact that people are frequently moving and traveling to other states, which have different laws for every day occurrences such as sale transactions. (19) This difference in law can deter traveling persons from entering into agreements and, in doing so, disturb economic development and the flow of commerce in society, which may lead to the federal government's involvement with state activity. (20) To avoid this, "[t]he ULC improves the law by providing states with non-partisan, carefully-considered, and well-drafted legislation that brings clarity and stability to critical areas of the law." (21)

The process of drafting an act consists of several steps.22 First, the drafted act must be approved at no less than two annual meetings with state commissioners. (23) A vote is taken, and if the majority of the states approve the act (there are certain requirements as to how many states must be present), (24) it is then approved and each state's legislature can review the act to decide whether it wishes to enact it as state law. …

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