Columbia Nitrogen Corp. v. Royster

451 F.2d 3 (4th Cir. 1971)

 

RULE:

Va. Code Ann. § 8.2-202 draws a distinction between supplementing a written contract by consistent additional terms and supplementing it by course of dealing or usage of trade. Evidence of additional terms must be excluded when the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement. Significantly, no similar limitation is placed on the introduction of evidence of course of dealing or usage of trade. Indeed the official comment notes that course of dealing and usage of trade, unless carefully negated, are admissible to supplement the terms of any writing, and that contracts are to be read on the assumption that these elements were taken for granted when the document was phrased. Since the Uniform Commercial Code assigns course of dealing and trade usage unique and important roles, they should not be conclusively rejected by reading them into stereotyped language that makes no specific reference to them.

FACTS:


Appellee brought suit for breach of contract by appellant in the sale of phosphate. Appellant defended on the grounds that the contract, construed in light of the usage of the trade and course of dealing, imposed no duty to accept at the quoted prices the minimum quantities stated in the contract. The district court excluded evidence about course of dealing and usage of trade; appellant sought review of an adverse judgment. On review, judgment was reversed in part as the district court erred in precluding appellant from introducing evidence about course of dealing and usage of trade to supplement the terms of the parties' contract.

ISSUE:

Did the district court err in excluding evidence about course of dealing and usage of the trade?

ANSWER:

Yes.

CONCLUSION:

In finding that the evidence had been improperly excluded, the court noted that under Virginia's Uniform Commercial Code, contracts were to be liberally construed and applied to promote their underlying purposes and policies, including the continued expansion of commercial practices through custom, usage, and agreement of the parties. Further, Va. Code Ann. § 8.2-202 authorized their use to explain or supplement a contract even where contract language was unambiguous. Thus, the evidence was improperly excluded.

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