course of performance

Primary tabs

Course of performance refers to a sequence of conduct between two parties with respect to a particular transaction.

  • As per UCC §1-303, a course of performance exists for a given transaction if:
    • The transaction involves multiple occasions for performance.
      • For example, “X will buy stone from Y every month and Y shall deliver that stone before the month has ended.” And, 
    • 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.
      • For example, this part is met if Y delivers X stone at the beginning of the next month and X accepts the stone. 

Establishing a course of performance is often used to aid in interpreting contracts, particularly with gap filling. Course of performance is often the best evidence of what parties intended since it calls for looking at how both parties have performed up to the present time under the particular contract at issue.

  • Per UCC §2-208, any course of performance accepted or acquiesced in, without any objection, becomes relevant evidence to show that a term has been modified or waived.
    • For example, Y can raise X’s acceptance of stone at the beginning of every month to show that the contract was modified to no longer require the stone to be delivered at the beginning of the month. 

Course of performance differs from the related course of dealing because course of performance concerns conduct after a contract has been formed whereas course of dealing is concerned with conduct that occurred before the contract in question was formed. 

[Last updated in July of 2022 by the Wex Definitions Team]