Confusion about Custom: Disentangling Informal Customs from Standard Contractual Provisions

Abstract

What is place of custom in creation and enforcement of commercial obligations? Lisa Bernstein addresses that question with a frontal assault on working r ules that Uniform Commercial Code (UCC) prescribes for interpreting commercial promises. Her opening salvo notes that UCC is based on premise that unwritten customs and usages of trade exist and that in commercial disputes they can, and should, be discovered and applied by courts.' The relevant landscape is shaped by UCC ? 1-201(3), which defines an agreement to include the bargain of parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of peiformance.2 It is also found in comment 1 to UCC ? 1-205, which instructs courts to find the meaning of agreement of parties ... by language used by them and by their action, read and interpreted in light of commercial practices and other surrounding circumstances.3 To most individuals, these provisions seem to support underlying principle of freedom of contract. It therefore comes, perhaps, as something of a shock to learn that Bernstein has demonstrated in meticulous detail that empirical predicate on which this premise rests is, not to put too fine a word on it, often false in fact. Bernstein studies evolution of trade rules in a number of specific industries; in each case she finds a constant pressure to depart from gradual modification of trade usage by informal processes, such as those idealized by F.A. Hayek in