## Facts

- AAF-McQuay, Inc. (McQuay) manufactured, sold, and serviced heating and cooling units that used condenser coils.
- Some customers ordered coils with an anti-corrosive coating, including Heresite P-413.
- MJC, Inc. (MJC) held an exclusive license authorizing it to use and apply Heresite coating and obtained the coating material through that arrangement (about $26 per gallon).
- MJC’s materials described it as a seller of “Heresite Coating for Coils,” with prices stated by coil surface area (per square foot of tubes).
- The coating process involved multiple steps such as preparing/sandblasting coils, immersing (dipping) coils in coating, and curing.
- From about 1995 to 1998, McQuay shipped coils to MJC along with McQuay purchase orders requesting Heresite coating.
- The purchase orders stated quantity, product description, and unit price, and included printed terms and conditions addressing topics such as warranty and shipment.
- MJC received and accepted the orders, coated the coils, and invoiced McQuay. MJC’s invoices generally billed the coating material and the application work together in a single price.
- For certain oversized coils, MJC used a spraying method rather than the usual dipping/immersion method.
- Around 1997, McQuay began receiving customer complaints about coating failures, which McQuay attributed to MJC’s use of spraying for some coils.
- McQuay sued MJC in federal court. MJC moved for summary judgment, arguing the transactions were mainly services (outside UCC Article 2) and that McQuay’s claims were barred by a one-year warranty/limitations term.

## Issues

1. Whether the mixed goods-and-services transactions were predominantly sales of goods governed by UCC Article 2, or predominantly services governed by common-law contract rules.
2. Whether MJC was entitled to summary judgment based on a one-year warranty/limitations defense asserted to bar McQuay’s claims.
3. Whether a separate common-law breach-of-contract count should be dismissed as duplicative of McQuay’s UCC contract theory.

## Decision

- The court held the transactions were predominantly for the sale of goods (Heresite-coated coils) and therefore fell within UCC Article 2.
- The court denied MJC’s motion for summary judgment, concluding MJC had not shown that McQuay’s claims were barred as a matter of law by the asserted one-year warranty/limitations term.
- The court dismissed a separate common-law breach-of-contract count as surplusage where the UCC contract claim covered the same alleged breach.

## Legal Principles

- For a contract combining goods and services, courts apply the “predominant purpose” (or predominant factor) test to decide whether UCC Article 2 governs.
- Indicia that a transaction is a sale of goods include: the seller’s description of what is being supplied, goods-like pricing methods, and documentation consistent with sales (quantity, product description, unit price).
- Under the UCC, contract existence and terms may be shown through parties’ conduct, course of dealing, and course of performance, even when forms contain additional or different printed terms.
- A party seeking to enforce a shortened limitations period or similar warranty restriction at summary judgment must show the term became part of the parties’ contract and that it bars the claim on an undisputed record.
- A standalone common-law breach-of-contract count may be dismissed when it adds no separate theory or remedy beyond the UCC breach claim based on the same facts.

## Conclusion

AAF-McQuay held that McQuay’s recurring purchase-order transactions with MJC for Heresite-coated coils were predominantly sales of goods governed by UCC Article 2; the court denied MJC summary judgment on its services characterization and one-year limitations defense, and dismissed a duplicative common-law breach-of-contract count.


AAF-McQuay, Inc. v. MJC, Inc., 47 UCC Rep. Serv. 2d 48 (2002)