Also known as: practical constructions · course of performance · contemporaneous construction
Written by attorneys · grounded in primary & secondary sources — see below
A method of contract interpretation that assigns significant weight to the parties' repeated conduct in performing an agreement when ascertaining its meaning. Courts treat a course of performance accepted without objection as strong evidence of the parties' intended understanding. This approach applies when the agreement involves multiple occasions for performance and the conduct is consistent with the parties' manifestations of intent.
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Premier Manufacturing contracted with Prism Analytics for monthly software updates over two years. Prism delivered updates on the 15th of each month for eighteen months while Premier paid without objection. When Premier later claimed the contract required delivery by the 5th, the court used the parties' course of performance to interpret the timing term as allowing mid-month delivery.
Patriot Insurance purchased fleet vehicles from Platinum Partners under a contract silent on warranties. For six months Patriot accepted vehicles with visible defects and made no warranty claims. When a later defect claim arose, the court held that the parties' course of performance excluded the implied warranty of merchantability.
Peter Park agreed to supply produce to Pearl Porter at market price plus a handling fee. Over twelve deliveries Pearl paid an additional fuel surcharge without protest. When Pearl disputed the surcharge, the court interpreted the pricing term to include the surcharge because the course of performance aligned with the parties' overall conduct.
Pablo Perez leased equipment to Paula Pierce under a contract stating that rent was due on the first of each month. For nine months Paula paid on the tenth without objection. When Pablo sued for late fees, the court gave greater weight to the express due date than to the course of performance and enforced the written term.
Patrick Phan ordered custom parts from Premier Manufacturing under a contract requiring written change orders. Over ten orders Premier accepted verbal size changes and delivered accordingly without written confirmation. When a dispute arose over an eleventh order, the court treated the course of performance as evidence that the parties had modified the writing requirement.
Prism Analytics contracted with Patriot Insurance to supply data services at posted rates. For two years Prism accepted payments that included industry-standard surcharges without protest. When Prism later demanded strict posted rates, the court held that the course of performance confirmed the parties' understanding that surcharges were permitted under the pricing term.
Practical construction focuses on the parties' conduct after the contract is formed during repeated performances. Course of dealing concerns prior transactions between the same parties before the current agreement. Both can interpret meaning but practical construction receives greater weight than course of dealing under the Restatement hierarchy.
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No. Express terms receive greater weight than course of performance. A court will not allow conduct to override clear written language unless the parties' actions demonstrate a modification supported by consideration or waiver under applicable rules.
…produced from other ALCOA smelters were in inventory at ALCOA’s Warrick ingot plant and rolling mill.[^maj-32] Secondly, by its course of performance under Section 24 of the Molten Metal Agreement, Essex had previously established the principle of excusing performance by the same percentage as the percentage of forced reduction.[^maj-33]…
…only other instances of price increases under the 1969 contract, constituted mere waivers of the contract’s price term, not a
…is to be regarded as a center around which the parties intend the variation to occur.” [^maj-6]: U.C.C. § 2-208(1) defines “course of performance
…§ 2-209:42 (3d ed. 1982). See also Hawkland, Uniform Commercial Code Series § 2-209:05 (suggesting that reliance on a waiver by course of performance
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The contract must involve repeated occasions for performance. Each party must have knowledge of the performance and an opportunity to object. Acceptance or acquiescence without objection supplies the evidence that courts weigh in interpretation.
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Yes. The Restatement (Second) of Contracts applies the doctrine to all contracts involving repeated performance. Courts have used it in service agreements, leases, and construction contracts when the facts show a consistent pattern of conduct accepted by both sides.
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Course of performance occurs after the writing and therefore is not barred by the parol evidence rule. It can explain or supplement the writing and may even support a finding of modification or waiver when the conduct is inconsistent with an express term.
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