Plaintiff Loses Contract Claim Due To Quirks of Uniform Commercial Code

KJAER v. Village of Bensenville, Ill: Appellate Court, 2nd Dist. 2012 - Google Scholar:

The Uniform Commercial Code contains many statute of limitations provisions.  If the underlying transaction involved a sale of goods, the plaintiff has four years to sue.  If the transaction was one for "services," the plaintiff has 10 years to sue.

The UCC provisions are different than the Illinois statute of limitations which gives a plaintiff five years to sue on an oral contract and 10 to sue on a written contract.

Here the plaintiff sold radar and noise monitoring systems to the defendant and was not paid for six years. The trial court and the appellate court agreed that it was primarily a sale of goods not services and the claim was barred.

The court explains the inquiry as follows:

"16 This appeal concerns whether section 2-725 of the UCC or section 13-206 of theCode should apply to the subject matter of the agreement between the parties. Article 2 of the UCC applies only to transactions in "goods" (Nitrin, Inc. v. Bethlehem Steel Corp.,35 Ill. App. 3d 577, 592 (1976)), and "goods" are defined as "all things, including specially manufactured goods, which are movable at the time of identification to the contract for sale" (810 ILCS 5/2-105(1) (West 2010)). A contract for services is not a transaction in goods and is not covered by Article 2 of the UCC. Boddie v. Litton Unit Handling Systems, 118 Ill. App. 3d 520, 531 (1983). Where a contract mixes the sale of goods and the provision of services, the applicability of Article 2 of the UCC is determined by the "`predominant purpose'" test. Brandt v. Boston Scientific Corp., 204 Ill. 2d 640, 645 (2003). Under this test, if the contract is predominantly for goods and only incidentally for services, Article 2 of the UCC will apply. Brandt, 204 Ill. 2d at 645. If the contract is predominantly for services and only incidentally for goods, Article 2 of the UCC will not apply. Zielinski v. Miller, 277 Ill. App. 3d 735, 741 (1995). Further, the determination of the predominant purpose of a contract is usually a question of fact.Heuerman v. B&M Construction, Inc., 358 Ill. App. 3d 1157, 1165 (2005). Nevertheless, the predominant purpose of a contract is also susceptible to determination as a matter of law. Brandt, 204 Ill. 2d at 647-48."

Comment: the lesson is to check the Uniform Commercial Code before filing suit.  If there is doubt, file the case.

Edward X. Clinton, Jr.

www.clintonlaw.net

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