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Trade Usage: Definition, Example and Related Terms

What is a Trade Usage ?

Trade usage is a term used in the world of business, specifically in commercial contracts. It refers to the accepted and consistent way of doing things in a specific industry, trade, or market. It's kind of like an unwritten rule that everyone in a particular business follows because it's just 'how things are done'.

These 'rules' are not usually written down in a document or a manual, but they are widely acknowledged and followed by all who participate in that trade or industry. The term 'trade usage' is important in commercial contracts because it can help interpret or clarify what the parties intended when they made the contract.

If there's a dispute or confusion about what a term in the contract means, the courts may look at the trade usage to figure out what the parties likely intended. For example, if a contract about the sale of apples just says 'delivery', but doesn't specify how the apples are to be delivered, the court may look at how apples are usually delivered in that industry. If it's common in the apple industry to deliver apples in refrigerated trucks, then the court may decide that's what the parties intended. This is just one example of how trade usage can influence the interpretation of commercial contracts.


  • Scenario Description
    A company in the fashion industry signs a contract with a supplier to provide 'high quality' fabric. The contract does not define what 'high quality' means. In this situation, the term 'high quality' could be clarified by looking at the trade usage in the fashion industry. If it's generally accepted in the fashion industry that 'high quality' fabric means, for example, fabric that is durable, colorfast, and has a certain thread count, then that's what the parties likely intended when they signed the contract.
    A software company contracts with a customer to provide 'regular updates' to its software. The contract does not specify how often 'regular updates' should occur. The term 'regular updates' could be clarified by looking at the trade usage in the software industry. If most software companies provide updates to their software every month, then it's likely that's what the parties intended when they agreed to 'regular updates'.