Also known as: usages of the trade · trade usage · trade custom · custom of the 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 the transaction in question. The usage supplies implied terms or explains existing language when each party knows or has reason to know of the practice and neither knows the other intends something inconsistent with it.
Umar Underwood sold equipment to Union Steel and received a promissory note payable in sixty days. The note remained unpaid for eight months. In the equipment financing trade, notes of this type routinely stay outstanding for nine to twelve months before holders treat them as overdue. A court therefore holds that the note has not yet become overdue under the circumstances.
Nanakuli Paving contracted with Shell Oil for long-term asphalt supply at a fixed base price. When crude oil prices rose sharply, Nanakuli demanded price protection. Evidence showed that suppliers in the paving trade routinely adjusted prices downward when market conditions improved. The court treats that established practice as part of the agreement and requires Shell to honor the downward adjustment.
Select any source to read its text and confirm it supports the definition.
Eastern Air Lines and Gulf Oil maintained a fuel supply contract. Eastern routinely arranged to purchase fuel at one Gulf station while taking delivery at another. Gulf had accepted this freighting method for years without objection. The court finds the practice constitutes a binding usage that qualifies the written delivery terms.
Alcoa agreed to supply aluminum to Essex Group at a price tied to production costs. When energy prices surged, Alcoa sought an adjustment under industry practice. Essex resisted, claiming the contract fixed the formula. The court admits evidence that producers in the aluminum trade routinely renegotiate when input costs change dramatically and treats the practice as supplementing the agreement.
Transatlantic Financing chartered a vessel to carry wheat from Texas to Iran. The contract omitted any route specification. At the time of contracting, the usual and customary route passed through the Suez Canal. When the canal closed, the court determines that the trade usage supplies the expected route and measures commercial impracticability against that baseline.
Frigaliment Importing purchased what it believed were young chickens suitable for broiling. The seller delivered older stewing chickens that satisfied the written specifications under prevailing trade usage. The court finds that the term chicken in the poultry trade encompasses both categories and therefore the seller performed.
Trade usage may supplement an agreement only when each party knows or has reason to know of the usage and neither knows the other intends something inconsistent with it. If one party expressly rejects the usage during negotiations, the usage cannot be implied even if it is well known in the industry.
Supporting sources
A usage qualifies when it has such regularity of observance in a place, vocation, or trade that parties are justified in expecting it will be followed. Expert testimony or evidence of repeated observance in the relevant market typically establishes the required regularity.
Supporting sources
…expressed in or implied from the agreement. Such proof may also be found in the surrounding circumstances, including custom and usages of the trade. See 6 Corbin, supra , § 1339, at 394-397; 6 Williston, supra , § 1948, at 5457-5458. The contract in this case does not expressly condition performance upon availability of the Suez…