Also known as:usage of trade · trade usages · trade usage · trade custom · commercial usage
Written by attorneys · grounded in primary & secondary sources — see below
A usage of trade is a usage 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.
Sources & Authorities
How it applies
Common Examples
6
Consistent Interpretation With Trade Usage
Ulysses Ulrich contracted with Uptown Apparel to supply fabric bolts for seasonal production runs. The written agreement listed quantities and prices but said nothing about delivery sequencing. In the apparel industry, suppliers routinely deliver in staggered lots matching production schedules. When Uptown Apparel insisted on a single bulk shipment, Ulysses Ulrich pointed to the established sequencing practice. The court treated the usage as consistent with the parties' manifested intentions and required staggered deliveries.
Express Term Overrides Trade Usage
Union Steel agreed in writing with Ultra Precision to deliver steel plates within thirty days of order. Industry practice in precision manufacturing allowed sixty-day delivery windows when raw materials were scarce. Ultra Precision demanded the thirty-day schedule after a shortage arose. The court enforced the express thirty-day clause over the usage because written terms receive greater weight.
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Model Codes
Restatements
Study Supplements
Regular Observance Defines Usage
Ursula Ureña sold coffee beans to Upstream Petroleum under a contract silent on quality grading. In the commodity trading vocation, sellers routinely applied a specific moisture-content standard that changed slightly each harvest season. Ursula Ureña delivered beans meeting the current season's standard. The court found the practice qualified as a usage of trade because of its regularity and justified expectation of observance.
Price Protection As Local Trade Usage
Uliana Ustinova, an asphalt paver, contracted with a supplier for materials on Oahu. The supplier later refused to match competitor price reductions. Evidence showed that suppliers in the local paving trade routinely extended price protection to maintain market share. The court held that the practice constituted a usage of trade that supplemented the agreement and required the supplier to adjust prices.
Nanakuli Paving & Rock Sales, Inc. v. Shell Oil Co.664 F.2d 772 (9th Cir. 1991)
Customary Risk Allocation In Supply Contracts
Umar Usmani purchased aluminum from a producer under a long-term supply agreement that left pricing open. Trade practice in the aluminum industry allocated the risk of raw-material cost spikes to the buyer through escalation clauses. When costs rose sharply, the producer invoked the usage to adjust prices. The court recognized the practice as a usage of trade that qualified the open-price term.
Aluminum Company of America v. Essex Group, Inc.499 F. Supp. 53 (W.D. Pa. 1980)
Ambiguous Term Clarified By Usage
Una Unger bought frozen chickens from a seller under a contract describing them only as chickens. The buyer expected young birds suitable for broiling while the seller delivered older stewing chickens common in export trade. Evidence established that the term chicken in the relevant export vocation referred to older birds. The court applied the usage of trade to resolve the ambiguity in the seller's favor.
Frigaliment Importing Co. v. B.N.S. International Sales Corp.190 F. Supp. 116, 117 (S.D.N.Y. 1960)
Common questions
Frequently Asked
4
How does a court determine whether a practice qualifies as a usage of trade?+
A court treats the existence and scope of a usage of trade as a question of fact. It examines whether the practice has sufficient regularity of observance in the relevant place, vocation, or trade to justify an expectation that it will be followed. When the usage appears in a written trade code, the court interprets the writing as a question of law.
Supporting sources
Can trade usage supply missing quantity or duration terms in an otherwise skeletal agreement?+
Trade usage can supplement an agreement when the parties know or have reason to know of the usage and neither intends something inconsistent with it. Courts may draw on established industry patterns to fill gaps such as reasonable quantities or durations when the writing is silent but the parties have manifested assent to be bound.
Supporting sources
What happens when an express term conflicts with an established usage of trade?+
Express terms receive greater weight than usage of trade. When the written language and the usage cannot reasonably be read as consistent, the express term controls and the usage does not supplement or qualify the agreement.
Supporting sources
Does prior acceptance of non-conforming performance waive the right to insist on compliance with trade usage in future shipments?+
Prior acceptance of defective performance does not waive the right to demand adequate assurance or to insist on future compliance with commercial standards, including usages of trade. Each demand for assurance is evaluated independently on the facts existing at the time it is made.
Supporting sources
248 U.S. 215 (1918)Property
…and distributing news, not in the news itself. The defendant’s conduct is at most a breach of confidence or a violation of trade custom, but does not constitute a tort of misappropriation of property. The proper remedy, if any, lies with Congress through legislation, not through judicial creation of a new property right.…