Practitioners bringing claims for breach of contract must overcome the initial hurdle of a timely claim. Determining the applicable statute of limitations for a breach of contract action in New York requires deciding whether a contract is governed by the UCC, or by the CPLR.  

NY UCC § 2-725(1) provides that any action for breach of any contract for sale must be commenced within four years after the cause of action has accrued.  The parties may contract to shorten this period to not less than one year but may not extend it. 

Under NY UCC § 2-725(2), a cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except when a warranty explicitly extends to future performance- in that case the cause of action accrues when the breach is or should have been discovered.

In contrast, CPLR 213(2) provides for a six-year statute of limitations for “an action upon a contractual obligation or liability, express or implied, except as provided in Section 213-a of this article [residential rent overcharge] or article 2 of the uniform commercial code or article 36-B of the general business law [new home warranties].”

In the case of a contract for both goods and services, the test for which statute of limitations applies is whether the agreement is predominantly for the sale of goods or for the provision of services.  

To determine that, courts look to the main objective sought to be accomplished by the contracting parties. Whether the cost of materials is greater than the cost of labor is not the decisive factor; rather, courts look to the nature of the transaction as a whole, and the objective of the parties. Courts applying this analysis have, for example, determined that the following types of contracts were “predominantly” for services, rather than goods, and therefore subject to the longer 6-year statute of limitations under the CPLR:

• Blood transfusion
• Installation of a swimming pool 
• Furnishing of structural steel for bridge construction, where contractor had to purchase beams and splice them together-
• Installation of glass and other door and window parts 
• Interior design, although the cost of furniture selected by designer far exceeded the cost of her labor
• Refurbishment of the interior of a luxury yacht, including provision of new draperies, lighting fixtures, etc. 
• Installation of a roof on a manufacturing plant where the roofing material was defective 
• Purchase and installation of electronic entrance gates at a facility, including construction of stone pillars, a stone wall, concrete base, and purchase of the gates themselves

In contrast, courts have determined that a contract for delivery of heating oil and a contract for installation of an air condition unit were both primarily contracts for sale of goods, and therefore subject to a 4-year statute of limitations under the UCC.

When advocating for a contract to be viewed as a contract for service, rather than for goods, courts seem most amenable to the argument that specific labor and rendition of services are called for in the contract, rather than just the “incidental” transfer of title to personal property. To this end, the submission of technical and performance requirements of the contract into evidence aids a court in applying the longer CPLR statute of limitations.

Attorneys evaluating a breach of contract claim would be well-served to fully understand the requirements and performance of the contract, and whether the contract can be accurately described as predominantly a contract for services, if application of a longer statute of limitations would make a claim possible.

Erin Casey is counsel for Adams Leclair, LLP and located in Albany, NY.  If you have additional questions, please contact us at Adams Leclair LLP. www.adamsleclair.law