Legal Definitions - course of dealing

The term course of dealing refers to a consistent pattern of conduct or behavior that has been established between two parties through their previous transactions. It's essentially a history of how they've done business together in the past, which helps to create a shared understanding of their expectations for future agreements.

When parties enter into a new contract, and there's an ambiguity or a missing detail, a court or arbitrator might look at their established course of dealing to understand what they likely intended. This past behavior can shed light on unstated terms or how existing terms should be interpreted. However, a course of dealing cannot override or contradict explicit terms that are clearly written in the current contract.

Here are a few examples to illustrate this concept:

• Example 1: Business-to-Business Delivery Practices

  A local coffee shop has been ordering roasted beans from the same supplier for five years. While their written purchase orders don't always specify a delivery time, the supplier has consistently delivered the beans by 8:00 AM on Tuesdays and Fridays without fail. If a new order is placed and the beans arrive late one Tuesday, the coffee shop could argue that the 8:00 AM delivery time is part of their established course of dealing, even if it wasn't explicitly written in that specific order. This consistent past behavior created a mutual expectation.

• Example 2: Payment Terms and Discounts

  A graphic design agency frequently hires a freelance photographer for various client projects. For the past two years, the agency has always paid the photographer's invoices within 15 days, even though the standard contract template they use states "payment due within 30 days." If a dispute arises over a new project where the agency pays on day 25 and the photographer claims it's late, the photographer might point to the consistent 15-day payment history as their course of dealing, indicating a mutually accepted shorter payment window between them.

• Example 3: Scope of Service Inclusions

  A homeowner regularly uses the same pool maintenance company. For the past several seasons, every time the company services the pool, they also clean the surrounding deck area, even though "deck cleaning" is not explicitly listed in the annual service agreement. If the company changes technicians and the deck is not cleaned during a subsequent visit, the homeowner could argue that cleaning the deck has become an implied part of the service based on their consistent course of dealing over the years.