This is third post dealing with one of the most critical and fundamental issues of the Uniform Commercial Code: The agreement of the parties. The first element was the language used by the parties involved; second, is ascertaining if there is a course of performance, a certain type of behavior between the parties to a particular transaction which sheds light on the actual meaning of the agreement. 

One of the three remaining elements to the definition of agreement is course of dealing:

A “course of dealing” is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis for interpreting their expressions and other conduct.  Section 1-303(b)

In approaching Section 1-303(b), and Code sections in general, it is important to remember that any given Code section can have up to seven or eight rules or qualifiers.  Every word is important.   A careful look at Section 1-303(b) reveals a number of avenues through which various words can be utilized or attacked.

The conduct which gives rise to a course of performance must:

1. Be a sequence of conduct;
2. The conduct must involve transactions which occurred before the particular  transaction;
3. Conduct must “fairly regarded” as a common basis for interpreting their expressions and other conduct.

Section 1-303(b) makes good sense as it incorporates the realities which attend a history of knowing someone into a particular transaction.

All of the elements are important; however, one bears direct comment and examination.  This arises in connection with the requirement that a course of dealing requires “previous transactions” between parties.  It is clear that conduct which occurs between parties in past business dealings is relevant in understanding what the parties mean in a current transaction and is within the definition of course of dealing.

I think it is also important to integrate non transactional interactions between parties when these relationships give rise to the basis of understanding referred to in the section.  Certainly, one can learn a great deal about someone from knowing them outside a direct transactional basis, and to the extent this sheds light on what the parties meant in a particular transaction, I believe it should be incorporated into ascertaining what the agreement is.

With language, course of performance, and course of dealing having been discussed, the next blog will focus on the final two elements of ‘agreement: usage of trade and inferences from other circumstances.

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