Question

6.1 A statute gives the Department of the Interior the power to allow or to curtail mining within the national forests “as the best interests of all users of the national forest shall dictate.” Is this a valid delegation of legislative power to the agency, or is it too broad a delegation of power? 8.1 Before deciding which remedies are available under Article 2 of the UCC, one must first determine whether the transaction involved the sale of goods. Consider the following fact patterns. A. Tanzer entered into a contract with Audio Visual Artistry to install a “smart home” system in Tanzer’s house, which was under construction. The contract included expert installation services for a custom home theatre, lighting, music, and phone system. Was the contract for a sale of goods or services? [Audio Visual Artistry v. Tanzer, 403 S.W.3d 789 (Tenn. Ct. App. 2012).] B. Wachter, a construction company, entered into a contract to purchase an accounting and project management software package from DCI, a company that develops, markets, and supports software for construction companies. The package included “installation of the software, a full year of maintenance, and a training and consulting package.” Was the contract for a sale of goods or services? [Wachter Management Co. v. Dexter & Chaney, Inc., 144 P.3d 747 (Kan. 2006).] C. A customer sued a New York restaurant for breach of warranty after a glass of water allegedly exploded in his hand during the course of a meal. Does the claim involve the sale of goods? [Gunning ex rel. Gunning v. Small Feast Caterers, Inc., 777 N.Y.S.2d 268 (N.Y. Sup. 2004).] D . Brenda Brandt underwent an operation at the Sarah Bush Lincoln Health Center to implant a ProtoGen Sling to resolve her urinary incontinence. Instead of solving the problem, the sling resulted in serious complications and was subsequently removed. After the device was recalled by its manufacturer, Brandt sued the Health Center for breach of warranty. Does the claim involve the sale of goods or services? [Brandt v. Boston Scientific Corp., 792 N.E.2d 296 (Ill. 2003).

Answer 1

6.1

Administrative agencies make rules, conduct formal adjudications, take informal discretionary actions, and conduct investigations. They are often called the fourth branch of government because they perform some of the functions of each of the other three branches of government, having what could be termed quasi-judicial, quasi-legislative, as well as executive, roles.

8.1

(B)        In Wachter Mgmt. Co. v. Dexter & Chaney, Inc., 144 P.3d 747 (Kan. 2006), the Supreme Court of Kansas found that this contract was for a sale of goods to which the UCC applied. A sale of computer software is considered to be a sale of goods subject to the UCC when the services provided along with the software are incidental. Determining whether services are incidental turns on whether the services would have been unnecessary without the purchase of the software. In this case, the court held that the maintenance, training, and consulting services would have been unnecessary without the purchase of the DCI software. Therefore the services were incidental to the sale of the software, the software qualified as goods, and the UCC applied.

(C)        In Gunning ex. rel. Gunning v. Small Feast Caterers, Inc., 777 N.Y.S.2d 268 (Sup. 2004), the Kings County Supreme Court held that the offer of the glass of water to the patron was a sale of goods for the purposes of the implied warranty of merchantability under the UCC. UCC Section 2-314, which addresses this implied warranty, specifies that “the serving for value of food or drink to be consumed . . . on the premises . . . is a sale.” Although the restaurant offered the glass of water free of charge, the court found that there was a “serving for value.” The glass of water “was offered as an indispensable part of the meal,” the restaurant regularly served water, and “it is reasonable to presume that the cost of providing this drink was built into the bill.” The court also found that the warranty applied to both the water and the glass holding it. Accordingly, there was a serving for value of food or drink, and this serving was a sale to which the implied warranty of merchantability applied under the UCC.

(D)        In Brandt v. Boston Scientific Corp., 792 N.E.2d 296 (Ill. 2003), the Illinois Supreme Court concluded that the transaction between Brandt and the Health Center was for services and therefore Brandt could not maintain an action for breach of warranty under the UCC. For this mixed contract involving goods and services, the court applied the “predominant purpose” test, whereby it determines that a transaction is for goods only if the contract is “predominantly for goods and incidentally for services.” In this case, the court acknowledged that the sling itself was a good but found that the relevant issue was whether the transaction as a whole involved goods or services. Here the majority of the transaction in dollar value was for services (51.4 percent). The court also found that Brandt went to the Health Center for medical treatment rather than to buy a sling “as one buys goods from a store,” and that the sling was only useful to Brandt after it had been implanted. As a result, the primary purpose of the transaction was for services, the medical treatment, and the incidental purpose was for goods, the sling. Therefore the transaction was characterized as one for services, and Brandt had no claim for breach of warranty under the UCC.