MBE Rules · Contracts
Predominant Purpose Test
Goods vs. services — predominant purpose
The rule
Mixed goods-services contracts are governed by the UCC only if the transaction's predominant purpose is the sale of goods, judged by the language, billing, and relative value.
In plain English
The Predominant Purpose Test determines whether a mixed contract involving both goods and services falls under the Uniform Commercial Code (UCC). If the main purpose of the contract is to sell goods, the UCC applies, and this is assessed by looking at the contract's language, how it is billed, and the relative value of the goods versus services.
Worked example
A contractor agrees to build a custom kitchen, which includes both the installation of cabinets (goods) and the labor for installation (services). If the cost of the cabinets is significantly higher than the labor, and the contract emphasizes the sale of the cabinets, the predominant purpose is the sale of goods, making the UCC applicable.
Memory hook
Goods over services? UCC rules the day!
The trap
Exams may present scenarios where the value of goods and services is close, tricking students into misapplying the test. Students might focus too much on one factor, like billing, without considering the overall purpose.
How examiners test it
Questions often present a fact pattern involving a mixed contract and ask whether the UCC applies, requiring students to analyze the predominant purpose based on the provided factors.
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