MBE Rules · Contracts
Course of dealing, course of performance, usage of trade
UCC §1-303
The rule
Under the UCC, a contract's meaning is explained by: (a) course of performance (under THIS contract), (b) course of dealing (between THESE parties on prior contracts), and (c) usage of trade (in the industry). Order of priority: express terms > course of performance > course of dealing > usage of trade.
In plain English
When figuring out what a contract means, look at how the parties have acted in this deal, past deals, and what’s normal in the industry. Clear terms in the contract come first.
Worked example
If a buyer and seller have always accepted late deliveries in past deals, but the contract says 'on time,' the contract's terms win. However, if the contract is vague, their past behavior helps interpret it.
Memory hook
Performance, then Past, then Public. First, check this contract, then past dealings, finally industry norms.
The trap
Students think: Usage of trade trumps all. Wrong, because express terms and course of performance come first. The actual test is express terms > course of performance > course of dealing > usage of trade.
How examiners test it
The MBE loves: a conflict between contract language and industry norms. Trap: assuming industry norms override express terms. Correct approach: prioritize express terms, then course of performance.
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