Keith Mack
In contract law, a course of dealing is a legal term referring to the past conduct and transactions between parties to a contract, which helps establish a shared understanding of their expressions and actions. It is a concept in US contract law, aiding courts in interpreting the intentions of contracting parties. A course of dealing is distinct from a course of performance, which relates to conduct after an agreement is formed. Evidence of a course of dealing can be used to explain or supplement a contract, but it cannot override the express terms of the contract or contradict written agreements. The Uniform Commercial Code (UCC) governs the usage of trade and course of dealing, with the former being subordinate to the latter.
| Characteristics | Values |
|---|---|
| Definition | "A sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct." |
| Legal Definition | Defined in the Uniform Commercial Code (UCC) § 1-303(b) |
| Usage | Helps courts understand the intention of contracting parties |
| Usage | Helps interpret the meaning of words used in patent claims |
| Compared to Course of Performance | Course of dealing concerns conduct before an agreement, whereas course of performance is about conduct after an agreement |
| Compared to Usage of Trade | Course of dealing prevails over usage of trade |
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Course of dealing vs course of performance
In contract law, a "course of dealing" is a sequence of conduct concerning previous transactions between parties to a particular transaction. It establishes a common basis of understanding for interpreting their expressions and conduct. A "course of dealing" may enter an agreement through explicit provisions or tacit recognition. It is usually used in US contract law to help courts understand the intention of contracting parties.
A "course of performance", on the other hand, is a sequence of conduct between parties to a particular transaction that exists if the agreement involves repeated occasions for performance by one party, and the other party, with knowledge of the nature of the performance, accepts or acquiesces to it without objection. A "course of dealing" is restricted to a sequence of conduct between parties before an agreement, whereas a "course of performance" refers to a sequence of conduct after or under the agreement.
Both a "course of dealing" and a "course of performance" are relevant in ascertaining the meaning of the parties' agreement and may supplement or qualify the terms of the agreement. However, if there is a conflict between the express terms of an agreement and the course of dealing or course of performance, the express terms of the agreement will prevail.
The Uniform Commercial Code (UCC) deals with "usage of trade" as a factor in interpreting the commercial meaning of an agreement. "Usage of trade" refers to any practice or method of dealing that is regularly observed in a particular place, vocation, or trade, and it is relevant in determining the parties' understanding of specific terms. The UCC rejects a "lay-dictionary" or "conveyancer's" reading of a commercial agreement, instead focusing on the language used and the actions of the parties involved.
In summary, a "course of dealing" refers to the past conduct and transactions between parties that establish a common understanding, while a "course of performance" refers to the conduct and performance under the current agreement. Both are important in contract law as they help interpret the parties' agreement and can give particular meaning to specific terms.
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Course of dealing vs usage of trade
In contract law, a "course of dealing" is a sequence of conduct concerning previous transactions between parties to a particular transaction that establishes a common basis for interpreting their expressions and conduct. This can be included in an agreement through explicit provisions or tacit recognition. A "usage of trade", on the other hand, is a practice or method of dealing that is regularly observed in a particular place, vocation, or trade, and is expected to be followed in a given transaction.
A course of dealing is specific to the parties involved and their previous transactions, whereas a usage of trade is applicable more broadly to an entire trade or vocation. For example, a manufacturer shipping nails to a contractor monthly for 16 months in a row without a new contract for each shipment can be considered a course of dealing. The contractor routinely paying for the nails without explicitly accepting the new monthly shipments establishes a common basis of understanding between the parties. In this case, the contractor would be contractually bound to pay for the new shipment based on their course of dealing, even if they attempt to reject it.
In contrast, trade usage refers to generally accepted meanings or practices in a particular industry or trade. For instance, in the construction industry, a "2x4" piece of lumber typically measures about 1.5"x3.5" rather than the exact dimensions. If a contractor attempts to reject a contract for the sale of 2x4 lumber based on the supplied product's actual size, the court will use trade usage to hold the contractor to the generally accepted usage in the industry.
The Uniform Commercial Code (UCC) addresses both concepts. It states that express terms of an agreement, course of performance, course of dealing, and usage of trade should be construed as consistent with each other when reasonable. If such a construction is unreasonable, there is a hierarchy where express terms prevail over course of performance, course of performance prevails over course of dealing, and course of dealing prevails over usage of trade.
In summary, a course of dealing refers to the specific sequence of conduct and understanding between two parties involved in previous transactions, while a usage of trade refers to widely accepted practices or methods in a particular trade or vocation that are expected to be followed in transactions within that domain.
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Course of dealing in US contract law
In US contract law, a "course of dealing" is a sequence of conduct concerning previous transactions between parties to an agreement that helps establish a shared understanding of their expressions and behaviour. It is a concept that is often used to help courts interpret the intention of the contracting parties.
The Uniform Commercial Code (UCC) defines a "course of dealing" as a sequence of conduct regarding past transactions between parties to an agreement that helps establish a shared understanding of their expressions and behaviour. This definition specifically refers to conduct before the agreement, as conduct after an agreement is considered a "course of performance". The UCC also addresses the "usage of trade", which is any practice or method of dealing that is regularly observed in a particular trade or vocation and is relevant to interpreting the agreement.
The "course of dealing" is an important concept because it helps people understand what to expect when they enter into an agreement. For example, if a store consistently offers a 30-day warranty on TVs, that becomes part of their course of dealing. If there is a dispute over the terms of a contract, a court may consider the course of dealing to determine the intention of the parties, but it cannot override the written terms of the contract.
Evidence of a course of dealing may be disallowed if the contract specifically and unequivocally negates it. The "course of dealing" concept is not limited to contract law and is also used in US patent law to interpret the meaning of words in patent claims by examining the prosecution history of the patent.
In terms of precedence, the express terms of an agreement take priority over the course of performance, course of dealing, and usage of trade. However, if there is a conflict between the course of performance and the express terms, the course of performance prevails. Similarly, the course of dealing takes precedence over the usage of trade.
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Course of dealing in patent law
In US patent law, the term "course of dealing" is used to interpret the meaning of words in patent claims by examining the patent's prosecution history. This helps to determine the understanding of the claim words between the patent applicant and the patent examiner. The prosecution history can reveal the course of dealing with the Patent Office, which may show a particular meaning attached to the terms or a position taken by the applicant to ensure the patent is issued.
A "course of dealing" is defined in the Uniform Commercial Code (UCC) as a sequence of conduct concerning previous transactions between parties to a particular transaction. This sequence of conduct establishes a common basis for interpreting the expressions and conduct of the parties. The UCC considers the "usage of trade" to reach the commercial meaning of the agreement, interpreting the language used in the context of the particular commercial transaction, locality, vocation, or trade.
In the context of patent law, the course of dealing helps to ascertain the meaning of the agreement between the patent applicant and the patent office. It gives particular meaning to specific terms and reveals the understanding between the parties. The course of dealing can be used to explain or supplement the written agreement and is considered integral to the contract, even if there is an integration clause stating that the writing is the complete and exclusive statement of the terms.
However, evidence of a course of dealing may be disallowed if it is carefully negated in the contract by specific and unequivocal language. The parol evidence rule states that extrinsic evidence of a prior or contemporaneous agreement may not contradict the written terms of the contract. Nonetheless, the course of dealing can be considered under common law if the written contract is ambiguous.
The creation and enforcement of patent rights are crucial in modern technology-driven economies, with record numbers of patents being issued annually. Patent law covers patentability, scope, enforcement, and the structure of the patent system. It is important to understand the justifications for patent rights and their relationship to other intellectual property concepts. Patent claims are a critical aspect, as they define the scope and limits of patent coverage. Strategies for dealing with patent infringement are also an essential part of patent law.
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Course of dealing and express terms
The term "course of dealing" is used primarily in US contract law to help courts understand the intentions of the contracting parties by examining their previous transactions. It is defined in the Uniform Commercial Code as:
> A "course of dealing" is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
In other words, a course of dealing refers to how the parties have previously dealt with each other before entering into the current contract. This can include the customs and trade practices of the industry. Past actions and attitudes can indicate what the parties intended in a new contract that is unclear on its face.
For example, in the case of Spurling v Bradshaw, the parties had dealt with each other for several years, and after every contract, Party A sent Party B a "landing account" that excluded their liability. Due to the previous dealings, this term was held to be included in all subsequent agreements.
However, there is no exact number of previous dealings required to result in terms implied through a course of dealing. In Hollier v Rambler Motors (AMC) Ltd [1972] 2 QB 71, it was confirmed that three or four dealings over five years did not result in any terms being implied due to the previous course of dealings.
While a course of dealing can be useful in interpreting a contract, express terms will generally prevail over the course of dealing. Express terms are those that have been explicitly communicated between the parties orally or in writing, and they represent the clear intention of the parties. Courts will give express terms full force and effect and will not consider parole evidence unless the contract is ambiguous.
Therefore, while a course of dealing can provide context and help interpret ambiguous contract language, it cannot contradict or override express terms that are clearly stated in the contract.
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Frequently asked questions
A course of dealing is a sequence of conduct concerning previous transactions between the parties to a particular transaction that helps establish a common basis of understanding for interpreting their expressions and other conduct.
A course of dealing helps the court understand the intention of the contracting parties. It is considered when there is a disagreement about what a contract means.
A course of dealing refers to the way people have acted in the past when making deals with each other. A course of performance is about what people do after they have made a deal.
No, a course of dealing cannot change what is written in a contract. However, it may be used to explain or supplement the writing.
A course of dealing prevails over a usage of trade. A usage of trade is any practice or method of dealing having regularity in a place, vocation, or trade that justifies an expectation that it will be observed regarding the transaction in question.
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