Usage, course of dealing, and course of performance - Next Generation Bar Exam
- Who decides whether a usage of trade exists and what it requires?
- The trier of fact. Existence and scope of a usage are questions of fact proved by evidence.
- What is a course of performance?
- A sequence of conduct between the parties in performing the agreement being interpreted. It arises after formation, under the same agreement.
- When is a party bound by a usage of trade it did not actually know?
- When it knew or had reason to know of the usage. A person engaged in the trade is ordinarily charged with knowledge of its usages.
- Under the Restatement (Second), what weight does a course of performance accepted without objection receive?
- Great weight in interpreting the agreement. A party who knowingly accepts repeated performance without objecting reveals how it understood the contract.
- What is a usage of trade?
- A practice so regularly observed in a place, vocation, or trade that it is expected to be observed in the transaction. Unlike course of performance and course of dealing, a usage need not involve the parties' own prior conduct.
- A contract calls for payment on the 1st, but for a year the seller accepts payment on the 5th without objection. What must the seller do before insisting on payment by the 1st?
- Give reasonable notice that strict compliance will be required. The course of performance may operate as a waiver, which can be retracted only on reasonable notice.
- What is a course of dealing?
- A sequence of conduct between the parties in previous transactions, establishing a common basis of understanding. It arises before the agreement being interpreted, from earlier contracts between the same parties.
- Under the Restatement (Second), how are express terms and usage of trade construed when possible?
- Consistently with each other wherever reasonable. Only when consistent construction is unreasonable do express terms prevail.
- In five previous contracts, a seller delivered on Saturdays without objection, and the new contract says nothing about delivery days. What source supports a Saturday delivery?
- The parties' course of dealing. Their prior transactions establish a common understanding that fills the silence in the new contract.