Legal Definitions - Usage of trade

Usage of trade is a term used in contracts to help interpret the meaning of certain terms. According to the Uniform Commercial Code, a usage of trade is a common practice or method of dealing that is regularly observed in a particular place, vocation, or trade. This regularity creates an expectation that the practice will be followed in a transaction.

• In the construction industry, it is common practice to use certain materials and methods for building foundations. This usage of trade would be expected to be followed in a contract for a construction project.
• In the fashion industry, it is common practice to use certain fabrics and designs for certain types of clothing. This usage of trade would be expected to be followed in a contract for a clothing manufacturing agreement.

These examples illustrate how a usage of trade can be used to interpret the meaning of certain terms in a contract. By understanding the common practices and methods of dealing in a particular industry, parties can ensure that their contract reflects these expectations and avoids any misunderstandings or disputes.