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Audio Visual Artistry v. Tanzer - 403 S.W.3d 789 (Tenn. Ct. App. 2012)

Rule:

In applying the predominant purpose test used to determine whether a contract predominately involves the sale of goods so that Article 2 of the Uniform Commercial Code is applicable, the court looks to four factors: (1) the language of the contract; (2) the nature of the business of the supplier of goods and services; (3) the reason the parties entered into the contract; and (4) the amounts paid for the rendition of the services and goods, respectively.

Facts:

Tanzer and appellee Audio Video Artistry (AVA) entered into discussions for the sale and installation of electronic and entertainment equipment in Mr. Tanzer's home. AVA was a residential entertainment and communications firm specializing in custom design projects. The sale, installation, and integration of state-of-the-art home theater, multi-room music and television, lighting control and phone/intercom systems for the creation of a smart home was AVA's specialty. After myriad problems arose, Tanzer fired AVA, who filed a lawsuit to collect the unpaid balance for equipment and installation. The trial court determined that the primary purpose of the parties' agreement was the sale of goods and applied Article 2 of the Uniform Commercial Code. The court granted judgment in favor of AVA, but allowed certain offsets for items rejected by Tanzer. Tanzer appealed, arguing that the trial court erred in applying the UCC, and in its calculation of damages. Tanzer also appealed the trial court's determination that the Tennessee Consumer Protection Act did not apply. 

Issue:

Did the trial court err in applying the UCC?

Answer:

No

Conclusion:

The court affirmed the trial court's decision. The court held that the trial court properly found that a contract between a homeowner and a company for a "smart home" was predominately for the sale of goods under Tenn. Code Ann. § 47-2-105. The contract contemplated the sale of various, moveable components, which were to be integrated via a control system; the service that the company performed was incidental to the overarching purpose of its business, which was to sell "smart home" components; the homeowner contracted for electronic equipment; and the costs of labor and services were insignificant compared to the cost of the equipment.

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