Course of Dealing in English Contract Law: Understanding Its Importance
When two parties enter into a contract, they do so with the understanding that the terms and conditions agreed upon will govern the relationship between them. However, over time, as the parties continue to engage with each other, they may develop a pattern of behavior that deviates from the strict terms of the contract. This pattern is known as the “course of dealing,” and it plays an essential role in English contract law.
What is the Course of Dealing?
The course of dealing refers to the behavior and interactions between the parties to a contract over a period of time. It includes the parties` previous conduct in terms of how they have performed their obligations, the communications they have exchanged, and the assumptions they have made about the terms of the agreement.
The course of dealing can be explicit or implicit. Explicit course of dealing involves explicit communications between the parties. This can include any written or oral discussions, emails exchanged, or meetings held. Implicit course of dealing, on the other hand, involves actions and behaviors that are not explicitly discussed but are understood by the parties based on their previous interactions.
What is the Role of the Course of Dealing in Contract Law?
The course of dealing is an essential element in determining the interpretation of a contract. It helps in clarifying ambiguous terms, filling gaps in the agreement, and providing context to the parties` actions and intentions. When parties engage in a course of dealing, they are implicitly modifying the terms of the contract.
The courts recognize the importance of course of dealing and use it as a tool to determine the terms of a contract. For instance, if a party has consistently performed a particular obligation in a certain manner, even though it is not explicitly mentioned in the agreement, it can be assumed that the parties intended it to be part of the agreement. Similarly, if a party has not objected to the other party`s behavior in the past, it can be assumed that they have accepted it as part of the agreement.
When Does the Course of Dealing Come into Play?
The course of dealing comes into play in two situations: interpreting ambiguous terms and modifying the contract.
Interpreting ambiguous terms: If the terms of a contract are ambiguous or unclear, the courts will look to the course of dealing to determine the parties` intention. The previous conduct of the parties can be used to clarify any doubt about the contract`s meaning.
Modifying the contract: When parties engage in a course of dealing, they are implicitly modifying the contract. If one party deviates from the terms of the agreement and the other party accepts the deviation, it can be assumed that the parties have modified the original terms of the agreement.
In conclusion, the course of dealing is an essential element in English contract law. It provides context to the parties` actions and intentions and helps in clarifying ambiguous terms. Parties should be aware of the implicit modifications that can occur through their conduct to avoid any misunderstanding or dispute in the future. As a professional, it is important to note that using relevant keywords such as “contract law” and “legal interpretation” can help improve the article`s visibility on search engines.