- If the construction company is correct, which body of law governs the finance company's right to recover the remaining payments?
Answer: UCC Article 2, because the transaction is a sale of goods with a security interest retained by the seller.
Because the option price is nominal ($1) and the total payments equal the crane's price plus interest, the transaction is not a true lease; it is a sale with a retained security interest. UCC Article 2A expressly excludes leases intended as security. Article 2 governs the sale aspects, while Article 9 governs the security interest. The label 'lease' and retention of title are not controlling, and the finance company's lending purpose does not make the transaction common law.
- Which law governs the distributor's warranty claim?
Answer: The CISG, because the parties have places of business in different contracting states and did not exclude its application.
The CISG automatically applies to contracts for the sale of goods between parties whose places of business are in different contracting states, unless the parties opt out. The United States and Germany are contracting states, and the parties did not exclude the CISG, so it displaces the UCC. State UCC law does not govern this international sale, and no federal common law of contracts applies.
- Which body of law governs the bakery's claims?
Answer: UCC Article 2, because the contract is predominantly for the sale of a good, with installation services incidental.
In a mixed goods-and-services contract, courts use the predominant-purpose test. The oven was a movable good, removable without material damage, and accounted for $220,000 of the $250,000 price; installation was incidental. Retention of title until payment creates only a security interest and does not turn the sale into a lease. The common-law service and fixture arguments fail.
- Which body of law governs the contract between the landowner and the contractor?
Answer: UCC Article 2, because the limestone is to be severed from the land by the seller.
Under UCC Section 2-107(1), a contract for the sale of minerals to be removed from real property is a contract for the sale of goods if they are to be severed by the seller. Because the landowner agreed to sell limestone that the landowner would remove, the contract is for goods. If the buyer were to sever, the contract would generally be treated as involving an interest in real property. Merchant status is irrelevant.
- Which body of law governs the owner's warranty claim?
Answer: Common law, because the predominant purpose of the contract was the service of overhauling the conveyor system.
The contract was for an overhaul of a conveyor system. Although the mechanic supplied replacement parts, the predominant purpose was the service of repair and overhaul; the parts were incidental to that service. Therefore common law, not UCC Article 2, governs. The separate parts charge does not convert the transaction into a sale of goods, merchant status does not change the governing-law analysis, and the fixture status of the conveyor system does not make this a real-property transaction.
- Which body of law governs whether the farmer is obligated to deliver the promised quantity?
Answer: UCC Article 2, because corn that is growing and will later be severed from the land is a good for purposes of the UCC.
UCC Article 2 applies to transactions in goods. Goods include growing crops, and future crops to be grown and severed by the seller are treated as goods under Article 2. The common law does not govern because the contract is not for an interest in land. Article 2A is inapplicable because no lease exists, and Article 2 does not require the seller to be a merchant.
- Which body of law governs the buyer's warranty claim?
Answer: UCC Article 2, because the predominant purpose of the contract was the sale of goods, with the intangibles incidental.
The contract's predominant purpose was the sale of tangible goods: machinery, equipment, raw materials, and inventory were valued at $2.3 million of the $2.5 million price. The customer list and trade-name license were incidental intangibles. UCC Article 2 therefore governs. A contract for the sale of a business as a going concern can be common law, but this contract was a sale of assets with the seller retaining the plant and no transfer of the business as a whole.
- Which body of law governs the dispute over the acknowledgment term?
Answer: The UCC as adopted in New York, because the parties' choice-of-law clause is effective and the contract is for the sale of goods.
Parties may choose the law governing their contract. The contract is for the sale of goods, so the chosen New York law includes New York's UCC. The choice-of-law clause is effective because the transaction bears a reasonable relation to New York, including the retailer's headquarters and delivery there. California's UCC and the common law do not displace the chosen law, and there is no federal general contract law.
- Which body of law governs the diner's warranty claim?
Answer: UCC Article 2, because the restaurant's sale of food to the diner was a sale of goods.
Food sold in a restaurant is a good under UCC Article 2, and a restaurant is a merchant with respect to food. The transaction is therefore a sale of goods subject to the implied warranty of merchantability. The service aspects of dining do not predominate for this purpose. Article 2A and identification-to-contract arguments are inapplicable.
- Which body of law governs whether the manufacturer may enforce the oral modification?
Answer: UCC Article 2, because the contract is for the sale of goods and the UCC supplies the rules governing modifications.
Because the contract is for the sale of goods, Article 2 of the UCC supplies the rules governing modification; the common-law consideration requirement does not apply. Under UCC Section 2-209, a modification needs no consideration to be binding, but the Statute of Frauds may still apply to the contract as modified. The custom manufacture of the boards does not turn the contract into a service contract. Answer D is wrong because merchant status is not the basis for the UCC modification rule, and the statement that a writing is never required is overbroad.
