Contracts/Course of performance

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Contracts Treatise
Table of Contents
Contracts Outline
Introduction and Definitions
Introduction
Definitions
Elements
Contract formation
Parties
Offer
Acceptance
Intention to Bind
Formal requisites
Mailbox rule
Mirror image rule
Invitation to deal
Firm offer
Consideration
Consent
Implication-in-fact
Collateral contract
Modification
Merger
Uniform Commercial Code
Uniform Commercial Code
Course of dealing
Course of performance
UCC-1 financing statement
Uniform Commercial Code adoption
Defenses against formation
Lack of capacity
Duress
Undue influence
Illusory promise
Statute of frauds
Uncertainty
Non est factum
Contract interpretation
Governing law
Construction and Operation
Parol evidence rule
Contract of adhesion
Integration clause
Contra proferentem
Excuses for non-performance
Mistake
Misrepresentation
Frustration of purpose
Impossibility
Impracticability
Illegality
Unclean hands
Unconscionability
Accord and satisfaction
Rights of third parties
Privity of contract
Assignment
Delegation
Novation
Third-party beneficiary
Performance or Breach
Necessity of performance
Sufficiency of performance
Anticipatory repudiation
Cover
Exclusion clause
Efficient breach
Deviation
Fundamental breach
Termination
Termination
Rescission
Termination and rescission
Abrogation and rescission
Subsequent contract
Termination
Forfeiture
Remedies
Specific performance
Liquidated damages
Punitive damages
Quasi-contractual obligations
Estoppel
Quantum meruit
Actions
Actions in General
Parties to Action
Pleading
Evidence
Questions of Law and Fact
Instructions
Trial and Judgment

The term course of performance is defined in the Uniform Commercial Code as follows:

(a) A "course of performance" is a sequence of conduct between the parties to a particular transaction that exists if:

(1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and
(2) the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.[1]

UCC § 1-303(a). "Course of dealing," as defined in [UCC § 1-303] subsection (b), is restricted, literally, to a sequence of conduct between the parties previous to the agreement. A sequence of conduct after or under the agreement, however, is a "course of performance."[2]

Where a contract involves repeated occasions for performance and opportunity for objection "any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement."[3] "[S]uch course of performance shall be relevant to show a waiver or modification of any term inconsistent with such course of performance."[4] This UCC section recognizes that the "parties themselves know best what they have meant by their words of agreement and their action under that agreement is the best indication of what that meaning was."[5]

It is well established that a written contract may be modified by the parties' post-agreement "course of performance." [6]

A waiver that changes the express terms of a contract can be established by evidence of a course of performance. This holds true even for contracts that are fully integrated. The policy behind this "broad doctrine of waiver" in contract law is to "prevent the waiving party from 'lull[ing] another into a false assurance that strict compliance with a contractual duty will not be required and then sue for noncompliance.' "[7]

It is not necessary that the contract be ambiguous before course of performance will be considered.[8]

A course of performance is shown by repeated instances of the relevant conduct, not single occasions or actions.[9]

References[edit | edit source]

  1. Sepinuck, Stephen L. Practice Under Article 9 of the Uniform Commercial Code. American Bar Association.
  2. Cmt. 2, UCC § 1-303.
  3. UCC 2-208[1].
  4. UCC 2-208[3].
  5. UCC 2-208, cmt, 1.
  6. See, e.g., Rose v. Spa Realty Assocs., 42 N.Y.2d 338, 397 N.Y.S.2d 922, 366 N.E.2d 1279 (1977); GE Capital Commer. Auto. Fin. v. Spartan Motors, Ltd., 246 A.D.2d 41, 52, 675 N.Y.S.2d 626, 634 (App. Div. 1998).
  7. Midwest Builder Distrib. v. Lord & Essex, 383 Ill. App. 3d 645, 674, 322 Ill. Dec. 371, 398, 891 N.E.2d 1, 28 (2007); Whalen v. K Mart Corp., 166 Ill. App. 3d 339, 343, 519 N.E.2d 991, 116 Ill. Dec. 776 (1988).
  8. Feinberg v. Federated Dept. Stores, Inc., 15 Misc. 3d 299, 300, 832 N.Y.S.2d 760, 761 (Sup. Ct. 2007).
  9. Dallas. Aero., Inc. v. CIS Air Corp., 352 F.3d 775, 783 (2d Cir. 2003); Cravotta v. Deggingers' Foundry, Inc., 288 P.3d 871 (Kan. Ct. App. 2012); Estate of Polushkin v. Maw, 170 P.3d 162, 171 (Alaska 2007).