UCC §1-303: Course of Dealing and Usage of Trade in New York
Updated: 3 hours ago
Updated October 22, 2026
Leveraging Course of Dealing and Usage of Trade Under NY UCC
Contracts don't exist in a vacuum; they're often influenced by the history between parties and the norms of the industry. The New York UCC recognizes this through the concepts of course of dealing, course of performance, and usage of trade.
Understanding UCC §1-303:
Course of Dealing:
Refers to previous transactions between the same parties.
Establishes a common basis of understanding for interpreting expressions and conduct.
Usage of Trade:
Practices or methods of dealing regularly observed in a particular trade or industry.
Justifies an expectation that they will be observed in the current transaction.
Course of Performance:
The conduct between parties concerning the performance of the contract in question.
Relevant when a contract involves repeated occasions for performance.
Implications for Contract Interpretation:
Filling Gaps:
These concepts can help fill in missing terms or clarify ambiguous ones in a contract.
Resolving Conflicts:
They can aid in resolving disputes by providing context to the parties' intentions.
Consistency and Predictability:
Encourage consistent practices, making commercial transactions more predictable.
These tools have limits, though. In Harman Becker Automotive Sys., Inc. v. Avnet, Inc., 2025 NY Slip Op 02157 (1st Dep't 2025), the First Department explained that under the UCC, the terms of a written agreement may not be contradicted "but may be explained or supplemented" by course of performance and course of dealing. Because the parties' memorandum of understanding was unambiguous and did not include a delivery obligation, the buyer could not use course of dealing to create one. The written terms come first.
Best Practices for Merchants:
Document Past Dealings:
Keep records of previous transactions and communications.
Those records can matter even when the contract says it is the parties' entire agreement. In Big Tree Energy Partners v. Bradford, 219 A.D.2d 27 (3d Dep't 1996), the court held that a merger clause did not bar evidence of course of dealing, usage of trade, or course of performance to explain an undefined contract term. There, the parties' course of performance supported the supplier's reading of the price term.
Understand Industry Norms:
Stay informed about standard practices in your industry.
Explicit Contracts:
Clearly outline terms to avoid unintended implications from prior dealings or trade usage.
If you plan to rely on an industry practice, be ready to prove it. In Zicari v. Joseph Harris Co., 33 A.D.2d 17 (4th Dep't 1969), a seller showed that other seedsmen used similar disclaimer language. The court held that this did not establish a usage of trade as a matter of law. Whether a usage exists, and how far it reaches, has to be proved as a fact.
Something we see again and again: more disputes over contracts drafted with AI tools. AI can produce a polished, generic contract. But if you don't know what you need it to say, it may leave out the terms that protect you, and that gap has become a real source of litigation.
Key Takeaways:
Recognize that past interactions and industry norms can influence contract terms.
Use clear and explicit language in contracts to define terms and expectations.
Being aware of these concepts helps in both drafting contracts and resolving disputes.
Disclaimer:
This article is for informational purposes only and does not constitute legal advice. Although I am an attorney, I am not your attorney, and reading this article does not create an attorney-client relationship. For advice pertaining to your specific situation, please consult a qualified attorney licensed in your area.
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