LawMeaning

Course of Performance

In one sentence

How the parties have actually carried out the contract in practice, which can clarify ambiguous terms.

Plain English

Course of performance refers to the way the parties have actually behaved under the contract over time. If a contract's language is unclear, courts look at what the parties actually did to figure out what they meant. For example, if a contract says you'll deliver goods "promptly" but the seller has always delivered on the 15th of each month and the buyer has always accepted it, that pattern shows what "promptly" means in practice.

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Example

A supplier's contract says it will deliver materials "as needed," which is vague. But over two years, the supplier delivers every Monday and the buyer accepts every Monday delivery without complaint. That course of performance proves the parties understood "as needed" to mean weekly.

Used in a sentence

“The course of performance showed that the parties had always waived the strict payment deadline, so the buyer's late payment was acceptable.”

Related terms

Course of Dealing
The pattern of past transactions between the same parties, used to interpret current contract terms.
Usage of Trade
Standard industry practices and customs that courts use to interpret contract terms.
Implied-in-Fact Contract
A contract inferred from the parties' conduct and the circumstances of their dealings.
Objective Theory of Contracts
The legal rule that contract meaning is based on what a reasonable person would understand, not secret thoughts.
UCC (Uniform Commercial Code)
A standardized set of rules governing commercial transactions adopted by most U.S. states.
Estoppel
A legal rule preventing someone from contradicting their own prior actions or words.
Offer
A proposal to enter into a binding agreement on specific terms.
Acceptance
Agreeing to the exact terms of an offer, creating a binding contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.