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1.5.7 Utility Service

Courts hold that a utility’s provision of water141 or and gas142 in metered amounts to customers involves the sale of “goods” covered by Article 2. The products being supplied are fairly identifiable as movable things before the contract is performed.143 Some courts hold that a utility’s provision of electricity is a sale of goods,144 but others disagree.145

The transmission of cable television programming was held not to be a transaction in goods, as the signals transmitted were not “fairly identifiable as movables before the contract [was] performed,” and the dominant purpose of the agreement between the company and the customer was the provision of a service.146 One court has held that the attempted use of a pay telephone does not involve a “transaction in goods.”147

Footnotes

  • 141 {129} Archer Daniels Midland Co. v. Brunswick Cty., 56 U.C.C. Rep. Serv. 2d 665, 674 n.10 (4th Cir. 2005) (as water can be measured by a flow meter, it is “movable” so meets U.C.C. definition of goods); Adel v. Greensprings of Vt., Inc., 363 F. Supp. 2d 692 (D. Vt. 2005) (water is goods even though it is not manufactured, and implied warranty of merchantability applies to it); Zepp v. Athens, 348 S.E.2d 673 (Ga. Ct. App. 1986); Jones v. Town of Angier, 638 S.E.2d 607 (N.C. Ct. App. 2007); Mulberry-Fairplains Water Ass’n v. N. Wilkesboro, 412 S.E.2d 910 (N.C. Ct. App. 1992) (town’s sale of water); Dakota Pork Indus. v. City of Huron, 638 N.W.2d 884 (S.D. 2002) (municipality’s provision of water is sale of goods, but no implied warranty of fitness for particular purpose arises). But see Mattoon v. City of Pittsfield, 775 N.E.2d 770 (Mass. App. Ct. 2002) (sale of water by municipality is rendition of services, not goods); Sternberg v. New York Water Serv. Corp., 548 N.Y.S.2d 247 (N.Y. App. Div. 1989) (although the furnishing of water was considered a sale of goods, no warranties of merchantability or fitness for a particular purpose were implied); Coast Laundry v. Lincoln City, 497 P.2d 1224 (Or. Ct. App. 1972); Gall v. Allegheny Cty. Health Dep’t, 555 A.2d 786 (Pa. 1989). But cf. Grace v. Zimmerman, 853 S.W.2d 92 (Tex. App. 1993) (assignment of wastewater capacity was not a sale of goods).

  • 142 {130} Koch Hydrocarbon Co. v. MDU Res. Group, 988 F.2d 1529 (8th Cir. 1993) (N.D. law); Prenalta Corp. v. Colo. Interstate Gas Co., 944 F.2d 677 (10th Cir. 1991) (Wyo. law); Aurora Natural Gas v. Cont’l Natural Gas, Inc., 1999 U.S. Dist. LEXIS 7120 (N.D. Tex. May 10, 1999); New Bremen Corp. v. Columbia Gas Transmission Corp., 913 F. Supp. 985 (S.D. Tex. 1995), aff’d, 108 F.3d 332 (5th Cir. 1997) (commercial purchase of natural gas); Kan. Mun. Gas Agency v. Vesta Energy Co., 843 F. Supp. 1401 (D. Kan. 1994); BTA Oil Producers v. MDU Res. Group, Inc., 642 N.W.2d 873 (N.D. 2002); Gardiner v. Philadelphia Gas Works, 197 A.2d 612 (Pa. 1964); Wagner v. Apollo Gas Co., 582 A.2d 364 (Pa. Super. Ct. 1990); Univ. of Pittsburg v. Equitable Gas Co., 5 Pa. D. & C.3d 303 (C.P. 1978); Howell Crude Oil Co. v. Tana Oil & Gas Corp., 860 S.W.2d 634 (Tex. App. 1993). See also Badwey Oil, Inc. v. ConocoPhillips Petroleum Co., 352 Fed. Appx. 276 (10th Cir. 2009) (Kan. law) (gasoline). But cf. Stanton v. Nat’l Fuel Gas Co., 1 Pa. D. & C.4th 223 (C.P. 1987) (when gas does not go through meter and there is no sale, not covered by Article 2).

  • 143 {131} Zepp v. Athens, 348 S.E.2d 673 (Ga. Ct. App. 1986); Helvey v. Wabash Cty. REMC, 278 N.E.2d 608 (Ind. Ct. App. 1972).

  • 144 {132} GFI Wis., Inc. v. Reedsburg Util. Comm’n, 440 B.R. 791 (W.D. Wis. 2010) (allowing claim for electricity as “good”); Kotz v. Haw. Elec. Light Co., 83 P.3d 743 (Haw. 2004) (claim involved over-voltage due to fallen tree branch); Helvey v. Wabash Cty. REMC, 278 N.E.2d 608 (Ind. Ct. App. 1972) (U.C.C. statute of limitations applies to electricity as “goods”); Cincinnati Gas & Elec. Co. v. Goebel, 502 N.E.2d 713 (Ohio Mun. Ct. 1986) (sale of electricity in metered amounts to customer’s home through utility’s conduits is sale of goods); Bellotti v. Duquesne Light Co., 4 U.C.C. Rep. Serv. 2d 1393 (Pa. Ct. Com. Pl. 1987) (electricity once delivered to home is a good, and U.C.C. applies).

  • 145 {133} Encogen Four Partners v. Niagara Mohawk Power Corp., 914 F. Supp. 57 (S.D.N.Y 1996) (sale of electricity is sale of services, not sale of goods), rev’d on other grounds, 163 F.3d 153 (2d Cir. 1998); G & K Dairy v. Princeton Elec. Plant Bd., 781 F. Supp. 485 (W.D. Ky. 1991) (stray voltage not “goods”); Lilley v. Cape Hatteras Elec. Membership Corp., 13 U.C.C. Rep. Serv. 2d 82 (E.D.N.C. 1990) (electricity is not “goods”); Mancuso v. Southern Cal. Edison, Co., 283 Cal. Rptr. 300 (Cal. Ct. App. 1991) (lightning-generated electricity is not a “good”); Rural Elec. Convenience Co-op. Co. v. Soyland Power Coop., Inc., 606 N.E.2d 1269 (Ill. App. Ct. 1992) (sale of electricity from one power company to another not a “transaction in goods” because not a sale to ultimate consumer, even though it passed through a meter as buyer received it); Singer Co. v. Baltimore Gas & Elec. Co., 558 A.2d 419 (Md. Ct. Spec. App. 1989) (electricity which has not yet passed through a meter into the customer’s home or business is not a “good” under the U.C.C.); New Balance Athletic Shoe, Inc. v. Boston Edison Co., 29 U.C.C. Rep. Serv. 2d 397 (Mass. Super. Ct. 1996) (electricity is not a good; U.C.C. not applicable); Citizens Ins. Co. v. Consumers Energy Co., 57 U.C.C. Rep. Serv. 2d 741 (Mich. Ct. App. 2005) (electricity is a service); Buckeye Union Fire Ins. Co. v. Detroit Edison Co., 196 N.W.2d 316 (Mich. Ct. App. 1972) (agreeing with trial court that electricity is not a good); Bowen v. Niagara Mohawk Power Corp., 590 N.Y.S.2d 628 (N.Y. App. Div. 1992) (provision of electricity to home is a service). Cf. RT Realty, L.P. v. Tex. Utilities Elec. Co., 181 S.W.3d 905 (Tex. App. 2006) (U.C.C. warranty and conspicuousness requirements do not apply to electric service that was governed by tariff that disclaimed warranties).

  • 146 {134} Kaplan v. Cablevision of Pa., Inc., 671 A.2d 716 (Pa. Super. Ct. 1996). See also Top Rank, Inc. v. Gutierrez, 236 F. Supp. 2d 637 (W.D. Tex. 2001) (transmission of cable television programming is not goods).

  • 147 {135} Whitmer v. Bell Tel. Co., 522 A.2d 584 (Pa. Super. Ct. 1987). See also Grace v. Zimmerman, 853 S.W.2d 92 (Tex. App. 1993) (temporary reservation of sewer services not a sale of goods).