Wednesday, March 25, 2009

Subscribe to the NYT Online? Another Fun Mixed Goods Case

Another lively case from the forthcoming ABA Sales Survey is Wall Street Network, Ltd. V. New York Times Co., 66 U.C.C. Rep. Serv. 2d. (West) 261 (Cal. Ct. Appeals 2008). The court considered a breach of contract claim arising out of an Internet marketing agreement between New York Times Co. (NYT) and Click2Boost, Inc. (C2B). Under the agreement, C2B was to solicit subscriptions to the New York Times by means of “pop up” advertisements on web sites. The pop up ads would ask the user for their zip code and, if suitable for home delivery of the newspaper, would prompt the user to subscribe. NYT agreed to pay C2B for each subscription. After NYT terminated the agreement two weeks early due to believed deficiencies in the subscription submissions, C2B’s assignee, Wall Street Network, Ltd., brought suit.

Was the subscription agreement governed by Article 2? The court ruled that the contract between NYT and C2B was not a sale of “goods” because the agreement was “for the placement of advertising.” Sure, the newspaper is a good, but that is not the determining fact. The newspaper as the good is more of a distraction here. What is really being sold? The court observed that even though C2B was paid a fee for each submission, C2B was not selling the names and addresses of the potential subscribers, but rather to place advertisements for the New York Times in designated locations and to forward to NYT the responses to the advertisements. Since advertising is not a good, Article 2 did not apply.

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