## Facts

- The Challenge Printing Company, Inc. (Challenge Printing) was a pharmaceutical printing company that sought to upgrade its management information system.
- Electronics for Imaging, Inc. (EFI) developed workflow-suite software for businesses, including its “iQuote” product.
- Challenge Printing and EFI entered into an agreement for iQuote software and EFI’s installation/implementation services.
- The iQuote software was not custom-built for Challenge Printing; it was standardized software installed within Challenge Printing’s existing information systems.
- After implementation, Challenge Printing claimed the iQuote project did not perform as expected and caused business and operational problems.
- Challenge Printing sued EFI asserting multiple claims, including breach of contract and other theories tied to the failed software implementation.
- In litigating its contract claim, Challenge Printing did not address whether UCC Article 2 applied to the parties’ agreement.
- EFI moved to dismiss portions of the complaint; the district court considered, among other issues, whether Article 2 governed the transaction.

## Issues

1. Whether an agreement for standardized software (installed into the buyer’s existing system) plus related installation services is governed by UCC Article 2.
2. If Article 2 applies, whether the complaint plausibly stated contract and UCC-based warranty theories arising from the software’s alleged failure to conform to the agreement.
3. Whether contractual limits on remedies and damages could be applied at the pleadings stage, including under UCC rules permitting remedy and damages limitations.
4. Whether tort-based theories seeking economic damages were barred or limited because the dispute centered on contractual performance rather than an independent legal duty.
5. Whether quasi-contract theories (such as unjust enrichment) could proceed when an express written agreement covered the same subject matter.

## Decision

- The court granted EFI’s motion in part and denied it in part.
- The court concluded UCC Article 2 applied to the parties’ transaction, treating the standardized software component as a “good” for purposes of Article 2 analysis.
- The court permitted Challenge Printing’s core contract-based claims to proceed under the Article 2 framework, finding the pleadings sufficient to allege nonconforming performance.
- The court dismissed or narrowed tort-based claims to the extent they sought recovery for economic loss arising from alleged nonperformance of contractual obligations.
- The court dismissed quasi-contract claims where the allegations rested on the same subject matter governed by the parties’ express agreement.
- To the extent the parties disputed the effect of contractual remedy and damages limitations under Article 2, the court treated enforceability and application as turning on the pleadings and, in some respects, later factual development.

## Legal Principles

- Standardized (non-custom) software provided in a commercial transaction may be treated as a “good,” and a hybrid software-and-services agreement may fall within UCC Article 2 when the software component predominates.
- When Article 2 applies, the UCC supplies default rules for breach and warranty analysis in addition to the parties’ written terms.
- UCC Article 2 allows commercial parties to limit remedies and consequential damages by contract, subject to doctrines such as unconscionability and failure of essential purpose.
- Tort theories cannot be used to obtain purely economic damages that amount to contract disappointed expectations when no independent duty is plausibly alleged.
- Quasi-contract remedies are generally unavailable when a valid, enforceable written contract governs the parties’ relationship and the same alleged wrong.

## Conclusion

Challenge Printing held that UCC Article 2 governed a commercial deal for standardized iQuote software and related installation services, allowing contract/UCC theories tied to alleged nonconformity to proceed while trimming back tort and quasi-contract claims that duplicated the contract dispute and sought purely economic losses outside an independent duty.


Challenge Printing Co. v. Electronics for Imaging, Inc., 500 F. Supp. 3d 952 (2020)