Installation Failure: How the Predominant Purpose Test Has Perpetuated Software’s Uncertain Legal Status Under the Uniform Commercial Code

Spencer Gottlieb*

Courts have struggled to uniformly classify software as a good or a service and have consequently failed to apply a consistent body of law in that domain. Instead, courts have relied on the predominant purpose test to determine whether the Uniform Commercial Code (“UCC”) or common law should apply to a given software contract. This test, designed for traditional goods and services that do not share software’s complexity or rapid advancement, has perpetuated the uncertainty surrounding software’s legal status. This Note proposes that courts adopt the substantial software test as an alternative to the predominant purpose test. Under this proposal, the American Law Institute (“ALI”)’s Principles of the Law of Software Contracts would govern transactions that substantially involve software, and the UCC or common law would govern all other transactions. This new test would provide greater legal clarity with only a minimal shift in jurisprudence. No court has yet adopted a similar test or cited the ALI Principles as authority in a software dispute. The landscape is ripe for change.

* J.D. Candidate, May 2015, University of Michigan Law School. I am grateful to Professor Bruce W. Frier for his guidance and feedback in developing this Note. Special thanks to the Michigan Law Review Notes Office and the team of citecheckers, pageproofers, and production managers for their tireless efforts. I dedicate this Note to my parents, Richard and Alison Gottlieb, and my sister, Jamie, whose love and support have made this journey possible.

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