BUS311_chapter_07

Example 728 shawon who owns an apartment building

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Unformatted text preview: ation that it will be observed with respect to the transaction in question.” Evidence as to usage of trade can be introduced to show that there was a reasonable expectation that performance under a given agreement would conform to the expected norm. Example 7.28. Shawon, who owns an apartment building, contracts for 30 air conditioning units with Joe’s Heating and Cooling Company. The contract doesn’t specify whether drainage hoses are included. When Shawon discovers the units were delivered without the hoses, he may present evidence that it is customary in the rental trade that hoses are included in the quoted price. Course of Performance (Practical Construction) (§ 2-208) In a contract for the sale of goods that requires repeated performance over a period of time, the actual performance tendered and accepted is relevant to explaining the terms of a contract. Example 7.29. Noxxe Oil agrees to supply Gus’s Gas Station with 1,000 gallons of gasoline per week for one year at the current market price. For the first ten months, Noxxe ships 400 gallons of 87 octane unleaded regular gasoline, 400 gallons of 89 octane regular-plus gasoline, and 200 gallons of 93 octane premium gasoline per week. Gus accepts the gas and promptly pays for it without complaint. In the eleventh month of the contract, Gus informs Noxxe that he wants it to ship 800 gallons per week of 87 octane regular and 200 gallons of 92 octane premium gas, since his customers are not buying the 89 octane regular-plus gasoline. Even though the agreement between Noxxe and Gus does not state the grades of gas to be purchased rog80328_07_c07_134-156.indd 150 10/26/12 5:52 PM Section 7.6 Chapter Summary CHAPTER 7 or the percentages of each grade, the course of performance between the parties would be relevant to show that gas was to be shipped in the same grades and quantities of each grade throughout the contract term. Interpretation of Sales Contract UCC Section 2-208(2) states that course of dealing, usage of trade, course of performance, and express terms of a contract should be construed as consistent with each other whenever it is reasonable to do so. When a clear conflict occurs, express terms in a contract control course of performance, course of performance controls course of dealing, and course of dealing controls usage of trade. This sets up the following hierarchy of contract construction with regard to determining the agreement between the parties: 1. Written contract provisions (most important and always control, absent a clear conflict in the contract); 2. Course of performance of the parties with regard to the contract in question; 3. Course of dealing between the parties with regard to previous contracts; 4. Usage of trade. In the last example of Noxxe Oil and Gus’s Gas Station, there is ambiguity in the contract, and hence a conflict, since there is no express provision as to what grades of gasoline are to be purchased in what amounts. The course of performance of this contract has Gus accepting Noxxe’s shipm...
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This test prep was uploaded on 04/09/2014 for the course BUS 311 taught by Professor Parker during the Spring '10 term at Ashford University.

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