Course of dealing refers to a sequence of conduct regarding previous transactions which can reasonably be seen as evidence of a common basis of understanding between the parties.
- If a television company generally includes a 30-day warranty with their television sales, this 30-day warranty may be part of the course of dealing.
Establishing a course of dealing is relevant in contract law because it helps with the application of gap filling rules.
- In the event that parties disagree over how a contract term should be interpreted, a court may look to the course of dealings to interpret the likely intentions of the parties. That said, a course of dealing cannot contradict explicit contract terms.
Course of dealing differs from the related course of performance because course of performance concerns conduct after a contract has been formed whereas course of dealing is concerned with conduct that occurred before the contract in question was formed.
See: UCC § 1-303. Course of Performance, Course of Dealing, and Usage of Trade.
[Last updated in July of 2022 by the Wex Definitions Team]
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