Chapter 5: Terms Implied by Custom, Usage or by Course of Dealing
5. Terms implied by custom, usage or course of dealing INTRODUCTION 5.01 Terms may be implied into a contract from local custom, the usage or practice of a particular trade or market or from a course of prior dealing between the parties concerned. The first two of these are essentially the same conceptually, but it is convenient also to deal with the case of prior course of dealing here, as all these cases may be considered to belong to a residual category having features in common with each other and common differences from other types of terms implied other than by statute. In this chapter, ‘custom’ is used to refer to the case of a term implied in a particular locality while ‘usage’ refers to terms implied within a particular trade. The term ‘trade practice’ is probably as good as ‘trade usage’, but a distinction has been drawn between usages which may give rise to an implied term and ‘mere trade practices’ which will not suffice. It is important to note here, however, that custom as a source of implication is now seen very largely as a dead letter. As Sir Christopher Staughton has commented, ‘[i]t is rare in modern times to find that a contract is varied or enlarged by custom’.1 He goes on there to instance the case of The Litsion Pride,2 as being one in which ‘it might be thought that [the judge] relied on market practice for the interpretation of a contract’3 before commenting...
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