The Impact of Course of Performance on Contracts Under NY UCC
In ongoing contracts, the way parties perform their obligations over time can influence the interpretation of the contract terms. The New York UCC recognizes this through the concept of course of performance.
Understanding UCC §1-303: Course of Performance
Definition:
Refers to the conduct between parties concerning the execution of the current contract, particularly when it involves repeated occasions for performance.
Use in Contract Interpretation:
Course of performance can be used to interpret ambiguous terms or fill gaps.
It can indicate a waiver or modification of contract terms if both parties knowingly accept a pattern of performance that deviates from the original agreement.
Implications for Merchants:
Consistency Matters:
Repeated actions can set a precedent that may alter the contract's interpretation.
Potential Modifications:
Accepting deviations without objection may modify the original terms.
Legal Recognition:
Courts may consider course of performance as evidence of the parties' intent.
Best Practices:
Monitor Performance:
Be aware of any deviations from the contract terms.
Address Deviations Promptly:
If the other party's performance is unsatisfactory, communicate objections immediately.
Document Agreements:
Formalize any agreed changes to the contract in writing.
Key Takeaways:
Your actions during contract performance can impact the contract's interpretation.
Consistent communication and documentation help maintain the integrity of the original agreement.
Understanding course of performance helps in managing contracts effectively.
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