Legal Definitions - course of trade

The term "course of trade" refers to the established customs, practices, and understandings that are commonly observed and accepted within a particular industry or business sector. These unwritten rules and norms can be crucial in interpreting contracts, determining reasonable conduct, and understanding the expectations of parties involved in commercial transactions, even if they are not explicitly stated in a written agreement. It essentially describes "how things are usually done" in a specific type of business.

Here are some examples illustrating the concept of "course of trade":

• Example 1: Agricultural Produce Delivery

  Imagine a large grocery store chain contracts with a farm to purchase a significant quantity of fresh strawberries. The written contract specifies the quantity, price, and delivery date, but it does not explicitly detail the exact procedure or timeframe for inspecting the produce upon arrival.

  In the agricultural trade, there is a well-understood course of trade that dictates how perishable goods are inspected. Buyers typically have a very short window, often within 24 to 48 hours of delivery, to inspect the produce for quality and report any defects. After this period, the goods are generally considered accepted.

  How it illustrates the term: If the grocery store chain waits five days to complain about the quality of the strawberries, the farm could argue that the store failed to adhere to the established course of trade for inspecting perishable goods. This industry custom, though not written in the contract, sets a reasonable expectation for both parties regarding timely inspection and reporting.

• Example 2: Custom Software Development

  A small business hires a software development firm to create a custom mobile application. The contract outlines the app's features, milestones, and payment schedule, but it is silent on the number of design revisions included for the user interface (UI) mockups.

  Within the custom software development industry, it is a common course of trade that initial UI designs typically undergo a limited number of client review and revision cycles (e.g., two or three major rounds) before additional revisions incur extra charges. This practice helps manage project scope and client expectations.

  How it illustrates the term: If the client continuously demands extensive revisions to the UI mockups beyond the initial rounds without offering additional payment, the software firm could refer to the established course of trade in their industry. This industry practice would support their position that further revisions would require an additional agreement or fee, as it reflects the customary way such projects are managed.

• Example 3: Commercial Real Estate Leasing

  A new restaurant owner signs a lease agreement for a commercial space in a bustling city. The lease specifies the monthly rent and term but doesn't explicitly state who is responsible for minor, routine repairs to the HVAC system, such as changing air filters.

  In the commercial real estate leasing course of trade, particularly for retail spaces, it is a widely accepted practice that tenants are responsible for routine maintenance and minor repairs of the leased premises, including items like HVAC filter changes, while the landlord handles major structural or system failures.

  How it illustrates the term: If the restaurant owner neglects to change the air filters, leading to a minor issue, the landlord could point to the course of trade in commercial leasing to assert that this responsibility falls to the tenant, even if not explicitly detailed in the lease. Both parties, operating within this trade, are presumed to understand these common responsibilities.