Okla. Stat. tit. 12A § 1-303

Current through Laws 2024, c. 135.

Section 1-303 - Course of Performance, Course of Dealing, and Usage of Trade

(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.

(b) 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 of understanding for interpreting their expressions and other conduct.

(c) A "usage of trade" is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage must be proved as facts. If it is established that such a usage is embodied in a trade code or similar record, the interpretation of the record is a question of law.

(d) A course of performance or course of dealing between the parties or usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware is relevant in ascertaining the meaning of the agreement of the parties, may give particular meaning to specific terms of the agreement, and may supplement or qualify the terms of the agreement. A usage of trade applicable in the place in which part of the performance under the agreement is to occur may be so utilized as to that part of the performance.

(e) Except as otherwise provided in subsection (f) of this section, the express terms of an agreement and any applicable course of performance, course of dealing, or usage of trade must be construed whenever reasonable as consistent with each other. If such a construction is unreasonable:

(1) express terms prevail over course of performance, course of dealing, and usage of trade;

(2) course of performance prevails over course of dealing and usage of trade; and

(3) course of dealing prevails over usage of trade.

(f) Subject to Section 2-209 and Section 2A-208 of this title, a course of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance.

(g) Evidence of a relevant usage of trade offered by one party is not admissible unless that party has given the other party notice that the court finds sufficient to prevent unfair surprise to the other party.

Okla. Stat. tit. 12A, § 1-303

Added by Laws 2005, HB 2028, c. 139, §16, eff. 1/1/2006; Amended by Laws 2008, SB 1708, c. 382, §1 (Laws 2008, SB 1708, c. 382 held unconstitutional and void by Weddington v. Henry, 2008 OK 102, 202 P.3d 143, and repealed by Laws 2009, SB 991, c. 208, §22, eff. 11/1/2009); Amended by Laws 2009, SB 991, c. 208, §1, eff. 11/1/2009.

Oklahoma Code Comment

Section 1-303 is old section 1-205 reorganized without a change in substance, except that it integrates the "course of performance" concept from UCC Articles 2 and 2A into the principles of this section and subjects that concept to sections 2-209 and 2A-208. As a result, the Oklahoma Comment to old sections 1-205 remains applicable, as do the Oklahoma Comments to former sections 2-208 and 2A-207.

A general definition of usage is at 25 Okla.St.Ann. § 19: "Usage is a reasonable and lawful public custom concerning transactions of the same nature as those which are to be affected thereby, existing at the place where the obligation is to be performed, and either known to the parties, or so well established, general and uniform that they must be presumed to have acted with reference thereto." 15 Okl.St.Ann. § 160 on interpretation of contracts provides that words are to be taken in their ordinary and popular sense unless used in a technical sense, or unless special meaning is given by usage. Two other sections are pertinent, although they do not use the term "usage." 15 Okl.St.Ann. § 152 provides that a contract shall be given an interpretation to give effect to the mutual intent of the parties, and 15 Okl.St.Ann. § 163 provides that a contract may be explained by reference to the circumstances under which it was made and the matters to which it relates.

The general Oklahoma definition [25 Okl.St.Ann. § 19], speaks in terms of "public custom," wherein the Commercial Code recognizes trade customs, and course of dealings between the parties. However, in Oklahoma, trade customs have been previously recognized as important in interpreting an agreement, U.S. v. Stanolind Crude Oil Purchasing Co., 113 F.2d 194 (C.C.A.1940). Oklahoma has previously held also that all the conditions and circumstances under which a contract was made, including prior and subsequent acts and conduct of the parties, may be considered in determining the intent of the parties. See Gillham v. Jenkins, 206 Okl. 440, 244 P.2d 291 (1952).

In addition, 15 Okl.St.Ann. § 162 provides that a contract shall be interpreted according to the usage of the place where it is to be performed. Although the UCC is more explicit than these statutes on contracts and the decisions thereunder, it appears that they are basically consistent. See also: 15 Okl.St.Ann. sections 152, 163 ; Chicago R.I. & P. Ry. Co. v. Basey, 118 Okl. 87, 246 P. 626 (1926); Beck v. Traders & Gen. Ins. Co., 182 Okl. 251, 77 P.2d 109 (1938); Principle Films, Inc. v. Wichita Mountains Easter Sunrise Service Ass'n, Okl., 288 P.2d 734 (1954). See also 15 Okl.St.Ann. sections 74, 75, 153-155, 157, 159-161, 164, 165 .

Issues governed by revised section 1-303 often arise in the context of sales or leases of goods, governed by UCC Articles 2 and 2A. The following discussion, derived from the former Oklahoma Comment to section 2A-207, relates to these issues.

Revised section 1-205 applies to leases. See section 2A-103(4). Such conduct will operate to give meaning to a lease agreement and may supplement and, subject to section 2A-208, may modify or waive a term of the lease agreement. These provisions displace the more general provisions of 15 Okla. Stat. sections 153-155, 159-161, and 163-165 for leases of goods.

Principles articulated in prior decisions, however, still remain valid for the most part. See, e.g., Westinghouse Credit Corp. v. Shelton, 645 F.2d 869 (10th Cir.1981) (acceptance of late payments may waive the right to strictly enforce the terms of a contract); J.W. Payne v. King's Van & Storage, Inc., 367 P.2d 173 (Okla.1961) (a course of conduct over a protracted period is a construction of the contract by the parties themselves); and First National Bank v. Gum, 293 P. 188 (Okla.1930) (where the contract clearly sets forth the agreement, proof of custom and usage is incompetent to change the terms). The UCC amendments since 1990 effect no changes to this case law. However, the possible influence of other UCC provisions also may need to be recognized. See, e.g., Ron Mead T.V. & Appliance v. Legendary Homes, Inc., 746 P.2d 1163 (Okla. App. 1987); Gillham v. Jenkins, 206 Okla. 440, 244 P.2d 291 (1952); Practical Products Corp. v. Brightmire, 864 P.2d 330 (Okla. 1992) (but see also 12 Okla. Stat. sections 2-601 and 2-508 ); and National Livestock Credit Corp. v. Schultz, 653 P.2d 1243 (Okla. App. 1982) (see also 12A Okla. Stat. sections 1-9-320 - 1-9-320.7 ).