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Writer's pictureReza Yassi

Course of Dealing and Usage of Trade

Updated: Nov 12

Course of Dealing and Usage of Trade

Leveraging Course of Dealing and Usage of Trade Under NY UCC


Contracts don't exist in a vacuum; they're often influenced by the history between parties and the norms of the industry. The New York UCC recognizes this through the concepts of course of dealing, course of performance, and usage of trade.


Understanding UCC §1-303:


  • Course of Dealing:

    • Refers to previous transactions between the same parties.


    • Establishes a common basis of understanding for interpreting expressions and conduct.


  • Usage of Trade:


    • Practices or methods of dealing regularly observed in a particular trade or industry.


    • Justifies an expectation that they will be observed in the current transaction.


  • Course of Performance:

    • The conduct between parties concerning the performance of the contract in question.


    • Relevant when a contract involves repeated occasions for performance.


Implications for Contract Interpretation:


  • Filling Gaps:


    • These concepts can help fill in missing terms or clarify ambiguous ones in a contract.


  • Resolving Conflicts:


    • They can aid in resolving disputes by providing context to the parties' intentions.


  • Consistency and Predictability:


    • Encourage consistent practices, making commercial transactions more predictable.


Best Practices for Merchants:


  • Document Past Dealings:


    • Keep records of previous transactions and communications.


  • Understand Industry Norms:


    • Stay informed about standard practices in your industry.


  • Explicit Contracts:


    • Clearly outline terms to avoid unintended implications from prior dealings or trade usage.


Key Takeaways:


  • Recognize that past interactions and industry norms can influence contract terms.


  • Use clear and explicit language in contracts to define terms and expectations.


  • Being aware of these concepts helps in both drafting contracts and resolving disputes.

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