The Hierarchy That Wasn’t There: Elevating “Usage” to its Rightful Position For Contracts Governed by the CISG

Johnson, William P | January 1, 2012

Under domestic U.S. sales law, usage of trade is relevant in ascertaining the meaning of an agreement, and it can be used to supplement, qualify, or explain an agreement. However, usage of trade may not be used under domestic U.S. sales law to contradict a written agreement. Moreover, any course of performance or course of dealing between the parties will prevail over inconsistent usage of trade. The United Nations Convention on Contracts for the International Sale of Goods, or CISG, similarly provides for consideration of usage to establish the terms of the agreement between the parties, as well as to determine party intent. When applying the CISG, U.S. courts have assumed that the same hierarchy they are accustomed to under domestic U.S. sales law that automatically relegates usage to a subsidiary role must exist under the CISG as well. But the CISG does not establish a hierarchy that requires usage to defer automatically to party conduct or to established party practice. Usage can be important for determining the terms of the agreement between the parties, especially when a commercial arrangement is consummated without a robust written agreement. Therefore, proper analysis of the role of usage is essential. This Article analyzes this issue and proposes a better understanding of the role of usage in the sale of goods contracts governed by the CISG.