Also known as: trade usages · usage of trade · usages of trade
Written by attorneys · grounded in primary & secondary sources — see below
A practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to a particular agreement. It may include a system of rules regularly observed even though particular rules are changed from time to time. Unless otherwise agreed, a usage of trade in the vocation or trade in which the parties are engaged or a usage of trade of which they know or have reason to know gives meaning to or supplements or qualifies their agreement.
Threshold Capital and Tundra Resources entered a supply contract that listed a base price but left delivery timing open. In their industry, suppliers routinely adjusted delivery windows by up to two weeks when weather disrupted routes. Threshold accepted the first delayed shipment without objection. The court treated the industry practice as consistent with the parties' manifested intention and enforced the adjusted schedule.
Terra Financial contracted with Thunderbolt Motors for custom parts at a fixed price per unit. Industry practice allowed sellers to pass through material-cost increases, but the writing expressly fixed the price for the contract term. When costs rose, Thunderbolt could not rely on the practice. The express term received greater weight and barred any adjustment.
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Tiana Tan ordered wholesale poultry from Tabitha Taylor under a contract calling for "regular" birds. In the regional poultry market, sellers and buyers consistently treated "regular" as birds of a specific weight range. Expert testimony confirmed the practice had sufficient regularity to create an expectation of observance. The court applied that meaning to resolve the dispute over which birds satisfied the order.
Nanakuli Paving purchased asphalt from Shell Oil under a long-term supply agreement that referenced posted prices. Evidence showed that every other major supplier in the Hawaiian paving trade routinely extended price protection when costs rose. The court found the practice regular enough to supplement the contract and required Shell to provide equivalent protection.
Transatlantic Financing agreed to carry cargo for the United States on a voyage that both parties expected would use the Suez Canal. When the canal closed, the carrier rerouted around the Cape. No evidence showed a trade usage in the shipping industry that treated canal availability as a condition of performance. The court therefore refused to excuse the carrier from the longer route.
Frigaliment Importing bought chickens described as "regular" from B.N.S. International Sales. The seller was new to the poultry trade and understood the term to include older stewing birds. The buyer could not prove that the seller knew or had reason to know of any industry usage limiting "regular" to young fryers. The court therefore applied the ordinary meaning rather than the claimed trade usage.
The existence and scope of a trade usage are questions of fact. When the usage is embodied in a written trade code, the court interprets the writing as a question of law. Expert testimony is the usual method of establishing a trade usage because parties' own testimony suffices for course of performance or dealing but not for trade usage.
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A trade usage supplements or qualifies an agreement when each party knows or has reason to know of the usage and neither knows or has reason to know that the other intends something inconsistent. Express terms receive greater weight than usage, so a usage cannot override a clear contradictory term.
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A party is bound by a trade usage only if the party knows or has reason to know of it. When one party is not a member of the trade, the other must show either actual knowledge or that the usage is so generally known that knowledge may be inferred.
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Trade usage can supply a reasonable term when the parties have manifested assent to be bound but have omitted an essential detail. The usage must be one that each party knows or has reason to know and that is consistent with the parties' actual bargain.
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…in the absence of specific agreement, the normal or usual facilities enter into the agreement either through the circumstances, usage of trade or prior course of dealing.” So long as this sort of assumption does not necessarily result in construction of a condition of performance, it is idle to argue over whether the usual and…