Cont: What law governs the transaction?

Supremacy Clause Art VI of Constitution

Constitution and laws and treaties of US are Supreme law and every judge is bound by them

Transactions are governed by:

• common law

• UCC Art 2

Common law

law built through judicial decisions with the power of stare decisis

• governs everything that’s not goods

  • real estate

  • intangibles

  • services

Hierarchy of Sources

1. US Constitution

2. Federal Statutes

3. Treatises

4. State Constitutions

5. State Legislation

6. Regulations

7. Local ordinances

Uniform Commercial Code (ucc)

• 1953, Karl Llewellyn

• comprehensive code dealing with the central issues of commercial law

• leading treatise

• Art 2: governs the sale of goods

UCC Art 1

catchall for term, definitions, and concepts

UCC Art 2

covers the sale of goods (SOME rules are only for merchants)

UCC 2a

lease of goods

UCC 2-105 (1)

goods = all things that are moveable at time of contract that’s for sale, other than money, investment security, and things in actions

• includes unborn animals and growing crops (severed from realty)

• goods=personal property (tangible only)

UCC 2- 104 (1)

merchant =person who deals in good by occupation and particular to goods being sold

The Restatement (2nd) of Contracts

uniform descriptions of law and states how common law schold work

• not law, just advice that many follow

Art 2-107

contracts for the sale of mineral or the like, or a structure, or its materials to be removed from realty (real property), is a sale of goods

• recent amendment that says it doesn’t matter if buyer or seller severs the realty

B takes car to S (mechanic) to have transmission serviced. Tranmission needed to be replaced, so sells new one to B and installs it. 7,500 total charge, where 3,500 was for transmission.

• What’s the governing law?

common law (mainly for a service)

Pass v Shelby Aviation (executors of estate sue workers for causing plane crash)

Rule: When a contract involves a mix of goods and services, UCC 2 applies when:

• goods are the main thing (predominant purpose test)

• the portion of the complaint is about goods (gravamen test)

When mixed of goods and services, apply:

Predominant purpose test (to determine if UCC 2 applies)

Predominant purpose test

look at:

• language (in terms of goods or service)

• nature of business of the supplier

• reason for entering contract

• amount charged for the goods and service separately

use whenever a mix of goods and services

(Pass v. Shelby)

B loses filling, so makes dentist appointment with S. S installs a gold filling that costs $800, and the service cost $200

• governing law?

common law (mainly for a service even though good costs more)

Extra: UCC 2-102 (amended in 2022)

covers mixed transactions (goods and services)

• applies the predominant purpose test

• if mainly goods, then UCC applies

• if mainly service, then bifurcate the contract and UCC applies only to the goods