Custom Commc'ns Eng'g, Inc. v. E.F. Johnson Co. - 269 N.J. Super. 531, 636 A.2d 80 (Super. Ct. App. Div. 1993)

Rule:

N.J. Stat. Ann. § 12A:2-725(1) provides that an action for breach of any contract for sale under the UCC must be commenced within four years after the accrual of the cause of action. N.J. Stat. Ann. § 2A:14-1, the six-year statute of limitation generally governing breach of contract claims, expressly states that its time-bar does not apply to any action governed by N.J. Stat. Ann. § 12A:2-725(1). Article 2 of the UCC applies to transactions in goods. N.J. Stat. Ann. § 12A:2-102. The term goods is defined as all things, including specially manufactured goods which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid. N.J. Stat. Ann. § 12A:2-105(1). A sale involves the passing of title from the seller to the buyer for a price. N.J. Stat. Ann. § 12A:2-106(1).

Facts:

Appellant franchisee, Custom Communications Engineering, Inc., entered into an agreement with respondent franchisor, E.F. Johnson Company, to exclusively sell respondent franchisor’s products within a designated territory. The agreement also stated that appellant would be compensated if products were sold within its territory by other dealers. Respondent franchisor terminated the agreement, and four years later, appellant franchisee filed an action against respondent franchisor and the other dealers who did not compensate appellant franchisee for their sales. The trial court awarded all respondents summary judgment, holding that the appellant franchisee’s cause of action accrued no later than 1982, and thus, was barred by the four-year statute of limitations under the UCC, N.J.S.A. 12A:2-725. Appellant franchisee challenged the decision. 

Issue:

Was the appellant’s claim barred by the four-year statute of limitations under the UCC, N.J.S.A. 12A:2-725, thereby warranting the grant of summary judgment to respondents? 

Answer:

Yes, but only with respect to the claim of the appellant against the respondent franchisor.

Conclusion:

The court reversed summary judgment as to respondent dealers because the action was in tort and the six-year statute of limitation had not run. However, the court affirmed summary judgment as to respondent franchisor holding that the four-year statute of limitation barred appellant's action on the contract. According to the court, where the dealership and distributorship agreements involved more than a sale of goods, the sales aspect of the relationship predominated, implicating the Uniform Commercial Code. The four-year statute of limitation applied to direct dealership agreement. The demand for accounting and tort claims were also time barred because they were related to the breach of contract.