Nanakuli Paving & Rock Co. v. Shell Oil Co.

664 F.2d 772 (9th Cir. 1981)



Haw. Rev. Stat. § 490:1-203 sets forth a basic principle running throughout the Uniform Commercial Code (Code). The principle involved is that in commercial transactions good faith is required in the performance and enforcement of all agreements or duties. Particular applications of this general principle appear in specific provisions of the Code. It is further implemented by Section 1-205 on course of dealing and usage of trade.


Appellant paving company brought suit claiming a breach of a contract to sell asphalt by the appellee. The jury returned a verdict in favor of the appellant awarding damages. The trial court set aside the verdict of the jury. On review, judgment notwithstanding the verdict was reversed and jury verdict reinstated because the verdict in favor of the appellant was supported by sufficient evidence of trade usage of price protection.


Did the trial court err in allowing evidence of trade usage to be admitted into the record?




The court determined that the Uniform Commercial Code in Hawaii required the court to look at external circumstances in order to determine the intent of the parties to a contract. The court also held that the unique circumstances of the market on Oahu and in Hawaii in general created a general trade usage of price protection in the sale of asphalt. Courts should not stand in the way of new commercial practices and usages by insisting on maintaining the narrow and inflexible old rules of interpretation. The court found the trial court did not err in allowing evidence of trade usage to be admitted into the record, and found sufficient evidence supported the jury's verdict in favor of the appellant.

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