Embryo Progeny Associates v. Lovana Farms, Inc.
17 U.C.C. Rep. Serv. 2d (West) 1064, 203 Ga. App. 447, 416 S.E. 2d 833 (1992)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
When a transaction involves a mix of goods and services, the Uniform Commercial Code's four-year statute of limitations applies if the dominant purpose of the overall transaction is the sale of goods, even if the breach relates to an agreement that primarily addresses services or delivery.
Facts:
- In 1982, Embryo Progeny's predecessor leased a herd of seven registered breeding cattle from Lovana Farms.
- Contemporaneously, the parties entered into a maintenance agreement where Lovana Farms would use artificial insemination to produce offspring from the herd for Embryo Progeny.
- Under the agreements, Embryo Progeny obtained title to the resulting embryos and offspring and paid Lovana Farms fees for successful transplants and maintenance.
- On January 26, 1985, the parties executed a mutual release agreement to terminate the prior agreements and set the terms for the temporary maintenance and final shipment of the offspring to Embryo Progeny.
- In December 1986, after the cattle were shipped pursuant to the release agreement, Embryo Progeny complained that Lovana Farms failed to ship all of the cattle listed in the agreement.
Procedural Posture:
- Embryo Progeny Associates et al. filed a lawsuit against Lovana Farms, Inc. in a Georgia trial court for breach of contract.
- Lovana Farms filed a motion for summary judgment, arguing the claim was barred by the four-year statute of limitations under the Uniform Commercial Code.
- The trial court granted summary judgment in favor of Lovana Farms.
- Embryo Progeny Associates, as the appellant, appealed the trial court's decision to the Court of Appeals of Georgia.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the four-year statute of limitations for the sale of goods under the Uniform Commercial Code apply to a breach of a release agreement when that agreement is part of a larger transaction whose dominant purpose was the production and sale of cattle?
Opinions:
Majority - Andrews, Judge
Yes. The four-year statute of limitations under the Uniform Commercial Code applies because the release agreement was an indivisible part of a larger transaction whose dominant purpose was the sale of goods. The court reasoned that the entire series of agreements, including the lease, maintenance, and release, constituted a single sales transaction. The breeding and maintenance services provided by Lovana Farms were analogous to a manufacturing process to produce the goods (cattle) for purchase by Embryo Progeny. Although the final release agreement itself did not transfer title and focused on delivery, it was an essential and non-severable part of consummating the overall sales transaction. Therefore, the entire transaction is governed by the sales article of the UCC, including its four-year statute of limitations.
Analysis:
This decision solidifies the application of the 'dominant purpose' test for mixed goods-and-services contracts in Georgia. It demonstrates that courts will look beyond a single document to the entire context of the parties' relationship to determine the nature of the transaction. The ruling prevents parties from circumventing the UCC by structuring a sale of goods as a series of separate agreements, some of which only pertain to services. This precedent guides future cases involving complex, multi-stage transactions by confirming that if the ultimate goal is the transfer of goods, the UCC's provisions will likely govern the entire deal.
