Legal Definitions - trade usage

Trade usage refers to a common and well-established practice or custom that is regularly followed by participants in a specific industry, trade, or business sector. When individuals or companies within that trade enter into an agreement, it is often understood that these customary practices will apply, even if they are not explicitly written into their contract. Courts may consider trade usage to help interpret the meaning of ambiguous contract terms or to supply missing terms, assuming that the parties intended to conduct their business according to the prevailing customs of their field.

• Example 1: Construction Materials Delivery

  A general contractor orders a large quantity of custom-cut lumber from a supplier for a new residential project. The contract specifies "delivery to the job site" but does not detail who is responsible for unloading the lumber or inspecting it upon arrival. In the local construction industry, it is a well-known custom (trade usage) that the supplier's truck driver is only responsible for placing the materials at an accessible point on the site, and the buyer's crew is responsible for unloading and immediately inspecting the goods for damage before signing off. If a dispute arises over damaged lumber discovered days after delivery, a court would likely refer to this established trade usage. Even though the contract was silent, the court would assume both parties, being part of the construction trade, understood and implicitly agreed to this customary division of responsibility for unloading and immediate inspection.

• Example 2: Agricultural Produce Quality

  A restaurant chain contracts with a farm to purchase "Grade A organic tomatoes" for the upcoming season. The contract outlines the quantity and price but does not specify what percentage of the tomatoes can have minor surface blemishes while still meeting "Grade A" standards. Within the agricultural produce industry, there's a recognized trade usage that "Grade A" organic tomatoes can include up to 5% minor surface imperfections or slight bruising, provided the overall quality and edibility are not compromised. If the restaurant chain tries to reject an entire shipment because 3% of the tomatoes have minor blemishes, the farm could argue that this falls within the accepted trade usage for "Grade A" organic produce. A court would likely consider this industry custom to interpret what "Grade A" means in this context, preventing the restaurant from imposing an unreasonably strict standard not customary in the trade.

• Example 3: Software Development Revisions

  A small business hires a software development firm to create a custom mobile application. The contract outlines the features and milestones but does not explicitly state the number of revision cycles included after the initial delivery of the beta version. In the custom software development industry, it is a common trade usage that a fixed-price contract typically includes one major revision cycle and two minor bug-fix cycles after the initial beta delivery, before the project is considered complete and final payment is due. If the business demands unlimited revisions without additional payment, the software firm could point to this established trade usage. A court would likely consider this industry custom to determine the reasonable expectations of both parties regarding post-delivery revisions, filling a gap in the contract based on common practice in the software development sector.