UCC § 1-205
Course of Dealing and Usage of Trade (former)
(1) A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct. (2) A usage of trade is any 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 existence and scope of such a usage are to be proved as facts. If it is established that such a usage is embodied in a written trade code or similar writing the interpretation of the writing is for the court. (3) A course of dealing between parties and any usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware give particular meaning to and supplement or qualify terms of an agreement. (4) The express terms of an agreement and an applicable course of dealing or usage of trade shall be construed wherever reasonable as consistent with each other; but when such construction is unreasonable, express terms control both course of dealing and usage of trade and course of dealing controls usage of trade. (5) An applicable usage of trade in the place where any part of performance is to occur shall be used in interpreting the agreement as to that part of the performance. (6) Evidence of a relevant usage of trade offered by one party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise to the latter.
Professor's notes
Section 1-205 (now substantially relocated to § 1-303 in revised Article 1, but retained in older codifications and cited throughout the statutory supplement) defines course of dealing and usage of trade. Course of dealing is a sequence of conduct between the parties on prior transactions that fairly establishes a common basis for interpreting their expressions. Usage of trade is any 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 in the transaction.
The doctrinal move is to make the parties' surrounding commercial context part of the agreement. Section 1-205 is the definitional foundation for the extrinsic evidence rules in Chapter 16. Where the casebook's Chapter 16 pairing of Nānākuli Paving v. Shell Oil and First National Bank of Lawrence v. Methodist Home explores how course of dealing and usage of trade supplement express written terms, § 1-205 supplies the definitions that make those arguments possible.
Priority matters: under the R2d § 203 hierarchy (and UCC § 2-208's parallel rule), express terms govern inconsistent course of performance, which governs inconsistent course of dealing, which governs inconsistent usage of trade. Section 1-205 sits at the bottom of that hierarchy, but its practical reach is enormous because trade usage often supplies terms the parties never discussed.
Students often confuse course of dealing with course of performance. Press the distinction: course of dealing concerns prior contracts between the same parties; course of performance (§ 2-208) concerns the parties' conduct under the very contract at issue. Ask students: if a seller has always invoiced net-30 on past contracts but the current contract says nothing about payment timing, which section governs — § 1-205 (course of dealing) or § 2-208 (course of performance)?
Connect to UCC § 2-208 (course of performance), UCC § 1-201(b)(3) (agreement defined to include usage), R2d § 222 (usage of trade), and the Chapter 16 extrinsic-evidence materials. The title "(former)" reflects that revised Article 1 renumbered and reorganized these provisions; the casebook's statutory supplement prints the New Hampshire codification, which retains the traditional numbering.
Text
UCC § 1-205. Course of Dealing and Usage of Trade.
(1) A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
(2) A usage of trade is any 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 existence and scope of such a usage are to be proved as facts. If it is established that such a usage is embodied in a written trade code or similar writing the interpretation of the writing is for the court.
(3) A course of dealing between parties and any usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware give particular meaning to and supplement or qualify terms of an agreement.
(4) The express terms of an agreement and an applicable course of dealing or usage of trade shall be construed wherever reasonable as consistent with each other; but when such construction is unreasonable, express terms control both course of dealing and usage of trade and course of dealing controls usage of trade.
(5) An applicable usage of trade in the place where any part of performance is to occur shall be used in interpreting the agreement as to that part of the performance.
(6) Evidence of a relevant usage of trade offered by one party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise to the latter.
[VERIFICATION REQUIRED: subsection text drafted from memory; cite-check against official pre-revision UCC Article 1 text before publication. This is the pre-revision § 1-205 text. Revised Article 1 (2001) renumbered and reorganized these provisions into § 1-303.]