Cengage Advantage Books: Foundations of the Legal Environment of Business 3rd Edition by Marianne Jennings

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Paramount Contracting Co. v. DPS Industries, Inc. 709 S.E.2d 288 (Ga. App. 2011)
Dirt Is Cheap, But It Is Still a Good
Facts
Paramount, a civil engineering firm and general contractor, submitted a bid to perform the construction of runway improvements at the Atlanta Hartsfield- Jackson International Airport. Paramount included DPS's quote for supplying the fill dirt for the project in its bid. DPS's written quote described its work as "furnish[ing] and haul[ing]/deliver[ing] borrow dirt from DPS's location to the job site," and specifically excluded the provision of "traffic control, dust control, security and escort services" from the scope of work. The quote provides that the dirt would be delivered for a price of "$140/Truck Load."
After Paramount was awarded the airport project, it contacted DPS about the amount of dirt and numbers of trucks that it would need for the airport project. DPS believed that the parties had a contract, and it sent a letter to Paramount confirming that it was "holding approximately 45,000 [cubic yards] of borrow dirt ready to be hauled in to your project once we receive [the] 10-day notice from you." Paramount did not respond.
Over the next two months, DPS sent other letters to Paramount about their agreement, but Paramount did not respond. After a group of executives from the two companies met, Paramount sent the following:
[Y]ou insisted that we give commitment to you for buying the dirt before you will give us price [for other work]. This really was a surprise to us.... Also please note that we have never committed to buy all the fill materials from you. In the last meeting you were informed that we intend to purchase some materials from you and it may be through other subcontractors. Our decisions will be conveyed to you as soon as possible.
Ultimately, Paramount bought the dirt it needed from another vendor. DPS sued Paramount for breach of contract. The jury found for DPS. Paramount appealed.
Judicial Opinion
BLACKWELL, Judge
The question of formation depends on [whether the contract is] governed by Article 2 of the Commercial Code or the common law. [I]t is easier, generally speaking, to form a binding contract under Article 2 than under the common law. Article 2 applies only to contracts for the sale of goods, and it does not apply to contracts for the mere provision of services or labor. When a transaction involves both the sale of a good and the provision of services or labor, whether the transaction is governed by Article 2 depends upon the "predominant purpose" of the transaction. When the predominant element of a contract is the sale of goods, the contract is viewed as a sales contract and [Article 2] applies, even though a substantial amount of service is to be rendered in installing the goods.
DPS said that the parties contemplated only that DPS would sell and deliver dirt, and DPS urged that Article 2 applies because the sale of goods-the dirt that DPS offered to furnish to Paramount-was the predominant purpose of the contemplated transaction. Paramount, on the other hand, said that the parties also contemplated that DPS would perform other tasks, such as placing and compacting dirt at the construction site.
The evidence is consistent with a finding that the sale of dirt was the predominant purpose of the contemplated transaction. The DPS quote contains representations and warranties about the quality of the dirt. The pricing was based on the quantity of dirt furnished, not the miles driven or time spent to deliver the dirt. DPS did not provide separate pricing for the sale of the dirt and its delivery. Paramount itself characterized the transaction repeatedly as one for the sale and furnishing of dirt, not the hauling of dirt.
Paramount relies on testimony that the costs of furnishing and hauling dirt would amount to approximately $70 or $80 per load, and that these costs would include both the expenses of operating a backhoe to load trucks and the expenses of operating the trucks. Paramount says that these cost factors all relate to hauling dirt and establish, therefore, that most of the transaction costs were related to hauling, not furnishing, the dirt.
Under Article 2, dirt is a "good" only if it is severed from the land by the seller, so the separation of dirt from the land is a necessary component of the sale of dirt, not its transportation after sale.
Finally, Paramount asks us to attribute the majority of the costs to hauling on the basis of the conventional wisdom that "dirt is cheap." We decline this invitation. Dirt might well be cheap, but we have no reason to believe that it is free and no basis for knowing just how cheap it is. We are not prepared to speculate that the commercial value of such dirt is negligible, much less to reverse a judgment entered on a jury verdict based on such speculation. Judgment affirmed.
Case Questions
1. Why is it important that DPS was not doing anything else at the airport site other than delivering the dirt?
2. Why is the concept of predominant importance important in determining UCC versus common law contracts?
3. Is the cost of the backhoes needed to remove the dirt considered by the court as part of the services versus goods cost component of the contract? Why or why not?