Course of Dealing

Plain English

Course of dealing is the history of how two parties have done business with each other in the past. If they have made similar deals before, courts look at that history to understand what the current contract means. It is different from course of performance (which is how they acted under the current contract) because it involves earlier, separate transactions.

Example

A retailer and supplier have done business for five years. In past orders, when the supplier's invoice said "net 30," the retailer always paid within 45 days and the supplier always accepted it. When a new order uses the same "net 30" language, that course of dealing suggests the parties understood it to mean 45 days in practice.

Used in a sentence

“The course of dealing between the contractor and the homeowner showed they had always allowed minor schedule delays without penalty.”

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