Usage of Trade

In one sentence

Standard industry practices and customs that courts use to interpret contract terms.

Plain English

Usage of trade refers to the common practices and customs in a particular industry or business field. When a contract uses industry-specific language or terms, courts interpret them according to how people in that industry normally understand them. For example, in the construction industry, "completion" might have a specific meaning that differs from everyday English.

Ad slot

Example

A wheat farmer and a grain buyer sign a contract for "number one wheat." In the grain industry, "number one" is a standard grade defined by moisture content and kernel quality. The court interprets the contract using that industry standard, not a plain English definition.

Used in a sentence

“The usage of trade in the shipping industry showed that "FOB port" meant the seller paid freight costs, not the buyer.”

Related terms

Course of Performance

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

Course of Dealing

The pattern of past transactions between the same parties, used to interpret current contract terms.

Objective Theory of Contracts

The legal rule that contract meaning is based on what a reasonable person would understand, not secret thoughts.

Implied-in-Fact Contract

A contract inferred from the parties' conduct and the circumstances of their dealings.

UCC (Uniform Commercial Code)

A standardized set of rules governing commercial transactions adopted by most U.S. states.

Goods

Tangible, movable items that can be bought, sold, or leased under the UCC.

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.