Gregory Funding LLC v. Saksoft, Inc.

Saksoft, Inc. (defendant) contracted to develop custom software for Gregory Funding LLC (plaintiff). The contract included a “Master Software Services Agreement” and two statements of work. The contract identified Saksoft as a “Service Provider” who would develop the software from concept to completion. Saksoft had discretion over staffing a four-person team to complete the project, including an onsite project manager, and promised to save Gregory 30 to 40 percent over staffing the project internally. Gregory paid Saksoft based on the hours the team worked. After six months, Gregory became dissatisfied with the first onsite project manager Saksoft provided and requested a replacement. Saksoft hired someone to find a replacement, but it took two months. Saksoft agreed to add a business analyst to the team, but Gregory rejected each of the three analysts Saksoft retained. After nearly three years, Gregory declared the project a disaster, hired its own analyst, and refused to pay four months of invoices. Gregory sued for breach of contract, claiming Saksoft lacked adequate software-development knowledge or expertise, hired incompetent staff, and cost more than developing the software internally. Gregory also asserted breach-of-warranty claims available only in cases involving contracts for the sale of goods under Oregon’s Uniform Commercial Code (UCC). Saksoft moved to dismiss that claim, arguing that the contract was primarily for services, not goods.