Usage

Nature of Usage

Usage is a course of dealing overtime adopted by persons in a particular business which has acquired notoriety such that where  persons contract in relation to that area they must be taken as intended to follow during the course of dealing, the usage  concerned unless they have expressly or impliedly agreed to the contrary.

Unless expressly or impliedly excluded it forms part of the contract.  Usages may exist in trades, occupation and branches of commercial life.  They may exist in certain places or throughout the State,  internationally or within local areas.

A usage is different to a custom in that it may extend to the whole jurisdiction.  It may be confined to a very limited area or a very limited class of persons.  A usage may not be established merely by a handful of persons agreeing that it is desirable.

The usage may fill out the contents of a contract.  It will not generally be written but it will be capable of expression.  It is effectively incorporated, unless the contrary is shown.

Parties may exclude usage.  They may modify it.  This may be done expressly or by implication.

Establishing Usage

Usage is based on practice; it may cease by disuse.  However, the fact that party’s contract to the contrary frequently, does not negate the usage.  If, however it practice to contract to the contrary, the usage is  extinguished.  A usage may be supplanted by another usage, which gradually supplants it.

A usage must be notorious, reasonable and certain.  It must not be contrary to legislation.  It need not have existed since time immemorial.

The key questions is the  notoriety which it  gains in the particular field. Notoriety must be gained in the relevant market, trade or the area of business so that persons who enter a contract of the nature affected by the usage must be taken to have intended that the usage forms part of the contract.

It need not necessarily be known to all or even the person against whom it is asserted.  It must be well known in the place and capable of being readily ascertained by persons who propose to enter a contract.

Criteria for Usage

Usages must be sufficiently certain.  They must be uniform and reasonable.  A usage which turns on what is thought reasonable by an adjudicative body, is not insufficiently certain.

The usage must be reasonable.  This is a question of law.  The existence of the usage is a question of fact.  A person is not to be taken as having accepted or acquiesced in a unreasonable usage.

A usage which is of general convenience is unlikely to be held unreasonable.  If the usage is reasonable for individuals it is likely to be held reasonable for classes of persons dealing in a particular business or trade.

In certain towns and borough in medieval times, usages were provided for by certain bodies have power to restrict and regulate trade. By local government legislation in the late 19^th  century, it was provided that notwithstanding custom persons could exercise trade or calling. The  Competition Act has the same effect.

A usage must be legal.  It cannot override law including common law or  statute.  Compliance with a usage is not a defence to a criminal charge.  A usage may not undermine fundamental interests in property law such as  allowing an interest inland to be created without writing.

The courts take judicial notice of some usages.  Others must be proved.  Usages may be peculiar to localities, trades and occupations.  They may be general to a trade or limited to a location.

Effect of Usage

Usages may affect the land or affect relationships with persons interested in land.  Usages may prescribe the duties and obligations of landlord and tenant in certain districts and certain contexts.

They arise most commonly in relation to agricultural tenancies  The former Ulster custom granted significant tenant rights prior to their being put on a statutory basis in the Land Acts.

The mercantile usages affect trade.  Much of modern commercial law is based on mercantile usages.  Mercantile usages still provide support to areas of commercial law.

The Law Merchant

Usages between persons engaged in mercantile transactions are to be distinguished from the law merchant.  The law merchant encompasses many such usages but not all.  The law merchant is sometimes considered to be ancient, in the nature of   custom and in other contexts it is described as part of common law. Neither description is fully accurate.

The law merchant  is described as a number of usages which exists between merchants and persons engaged in mercantile transaction throughout the civilized world.  The usages are such that they have obtained notoriety in the mercantile world at large such that they are recognised by courts.

Usages  in the law merchant must be applicable beyond the country.  They must be notorious internationally and not just nationally.  It must be such as receive judicial notice in the domestic courts.

Not every mercantile usage of which the courts take judicial notice is part of the law merchant.  It is comprised of usages of traders in different departments of trade which have been ratified by decisions of courts and law and adopted as settled law in the interest of commercial convenience.

The law merchant is not a fixed body of law forming part of the common law as such. However, the law merchant has become part of common law to the recognition of usages in different areas of trade.

Admission of Usage

The admission of a usage may act by way of exception to the parole evidence rule.  External evidence of a usage may be admissible to add incidents to a written contracts upon which it is are silent.

The principle  has been applied in commercial and non-commercial transactions.  It is based on the assumption that the parties have contracted with reference to trade usages.  It is assumed to that they proceeded on the assumption of the usage.  Accordingly, evidence of such usages and their incidents is receivable.

Evidence of the usage has been admitted in the areas of marine insurance, charterparties, bills of lading, sale of goods, stock exchange transactions, brokers, landlord and tenant relationships.

Evidence may be received to explain that which is doubtful.  It may not contradict things that are clear.  It is not received if it would  be inconsistent with the written contract.

Usage Varying Contract

The fact that the usages varies the contract  is  not sufficient to exclude it. It will be rejected only if it is repugnant to and inconsistent with  the usage.

In order to be repugnant, the custom must be such that if it was expressed in the  written contract be such as to  make it insensible inconsistent or unreasonable.

The above rules of interpretation and admission of evidence as to usages apply as between private persons in their dealings and commercial persons engaged in business.

Usages may be allowed to explain terms which in the face of it are unambiguous in order to explain their mercantile context.  Mercantile usage  may explain the language and show its true meaning.  The evidence is not excluded simply because the language appears to be unambiguous in itself.

Although parole evidence may not contradict a document, if the parties use terms not intending their ordinary meaning but intending the usages of trade, the usage does not contradict, but explains the contract.  This reflects the principle that the contract ought to be interpreted, consistent with and according to the intention of the parties.

Under the above principles evidence of usage is submitted to explain the particular words of the contract in the particular context of the trade.  In some such contracts apparently, unambiguous terms have a peculiar meaning specific or peculiar to that trade.

Becoming Bound by Usage

A person who is unaware of usage is not generally bound by it.  However, a person may be presumed to have knowledge notwithstanding ignorance of it when he entered the contract.  A person may in effect be obliged be duly acquainted with the usages of his trade.

If a usage is sufficiently notorious, knowledge will be imputed to the persons dealing in areas to which it applies. Where a usage has become general and notorious within its sphere, such that all persons can easily discover it and ascertain it, they are presumed to be aware of it and are deemed to submit to it even if they allege that they are not aware of it.

A person who deals in particular markets is bound to enquire as to what usages apply. Where person appoints an agent to do particular acts he is  taken to have consented to his acting in accordance with usages of the relevant  place of business.

Where usage applies to a particular profession or field, persons employing an individual in that field deal with him in accordance with the usage and authorized him to act in accordance with the usage.

Recognition of Usage

Courts will take judicial notice of some well-established usages. Other usages must be proved.  Proof is given by a verbal evidence by  persons familiar with the usage by reason of their business, occupation or position.  Clear evidence is required.

It must be found that the usage is certain and reasonable and acquiesced in universally in the trade.  A significant number of persons of standing in the business where the usage is alleged, must accept it.

The usage may be found unreasonable and void if it is one sided.  If it has been built up by a particular lobby or side of  business but is fundamentally unfair to the interest of the counterparts and infringe  fundamental principles of right and wrong, it will not be upheld.