Which statement describes course of performance in contract interpretation?

Which statement describes course of performance in contract interpretation?

• A. Course of performance
• B. Course of dealing
• C. Usage of trade
• D. Parol evidence rule

Answer: (A)

Course of performance describes how the parties have actually performed the contract in this transaction, and that real-world conduct helps reveal how the terms were understood and should be interpreted. When the contract is silent or ambiguous about a duty, looking at how the parties acted under the agreement so far shows the meaning they implicitly agreed to. This is different from course of dealing, which looks at how the parties behaved in prior, separate transactions, and usage of trade, which reflects common industry practices. The Parol Evidence Rule, while related to evidence outside the written contract, is not about interpreting how this contract has been performed.

Course of performance describes how the parties have actually performed the contract in this transaction, and that real-world conduct helps reveal how the terms were understood and should be interpreted. When the contract is silent or ambiguous about a duty, looking at how the parties acted under the agreement so far shows the meaning they implicitly agreed to. This is different from course of dealing, which looks at how the parties behaved in prior, separate transactions, and usage of trade, which reflects common industry practices. The Parol Evidence Rule, while related to evidence outside the written contract, is not about interpreting how this contract has been performed.