FAIRCHILD v. SWEARINGEN
377 P.3d 1262, 2014 OK CIV APP 50, 2013 Okla. Civ. App. LEXIS 124 (2013)
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Rule of Law:
For a hybrid contract involving both the sale of goods and the provision of services, the Uniform Commercial Code (UCC) applies only if the predominant purpose of the contract is the sale of goods; if the provision of services is the predominant purpose, common law governs the entire contract.
Facts:
- After storm damage, Dennis M. Fairchild contracted with Swearingen Remodeling, Inc. to replace the roof on his personal residence for a price of $12,036.12.
- The contract, signed on July 7, 2011, specifically required the installation of impact-resistant shingles, partly so Fairchild could obtain a discount on his homeowner's insurance premium.
- Fairchild made a partial payment of $6,000 after work began.
- In late July 2011, Swearingen completed the re-roofing project.
- On August 6, 2011, Swearingen discovered it had mistakenly installed standard thirty-year laminated shingles instead of the specified impact-resistant shingles.
- Swearingen notified Fairchild of this error on August 11, 2011.
- The parties, along with Fairchild's insurance company, were unable to negotiate a resolution to the dispute.
Procedural Posture:
- Dennis M. Fairchild filed a small claims action against Swearingen Remodeling, Inc. in an Oklahoma district court (trial court) for breach of contract.
- Swearingen filed a counterclaim for the unpaid balance of the contract price.
- Following a trial, the district court entered judgment for Fairchild on his claim and on Swearingen's counterclaim.
- The judgment gave Swearingen, the defendant, the option to either replace the roof with conforming shingles or refund Fairchild's partial payment.
- Swearingen elected to replace the roof.
- Fairchild, the plaintiff at trial, appealed the district court's judgment to the Oklahoma Court of Civil Appeals (intermediate appellate court).
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Issue:
Does the Uniform Commercial Code (UCC) apply to a mixed contract for roofing replacement, which involves both the sale of goods (shingles) and the provision of services (labor for installation)?
Opinions:
Majority - Fischer, J.
No. The Uniform Commercial Code does not apply because the predominant purpose of the parties' contract was the provision of services, not the sale of goods. The court adopted the 'predominant purpose' test to determine whether the UCC governs a mixed contract. In applying this test, the court found that although the shingles (goods) were an important term, the contract's primary objective was the labor and services required to remove the old roof and install a new one, including felt, shields, vents, and gutters. Because the contract did not segregate the cost of materials from labor, the court could not determine the value of the goods relative to the total contract price but concluded the service aspect predominated, citing the principle that construction contracts are generally not governed by the UCC. Therefore, common law principles of contract and remedies apply, not the UCC. Under common law, the trial court's judgment offering alternative forms of relief was a reasonable exercise of its discretion, and Fairchild's claim for rescission fails because he did not offer to return the value he had already received from the contract (the new roof).
Analysis:
This decision formally adopts the 'predominant purpose' test in Oklahoma for analyzing mixed contracts of goods and services, aligning the state with the majority of U.S. jurisdictions. The ruling clarifies that complex construction and installation agreements are presumptively treated as service contracts governed by common law, which limits the applicability of specific UCC provisions like a seller's right to cure non-conforming goods. This precedent emphasizes the importance for parties to clearly itemize costs for goods versus labor in contracts if they wish to argue for the application of the UCC. For future cases, it establishes a framework that looks beyond the mere inclusion of goods to the fundamental nature of the transaction to determine the governing law.
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