Interpretation in the UCC

Interpretation involves ascertaining the meaning of the words and provisions of a contract. Article 2 of the UCC is intended not to regulate commercial activity, but to facilitate it. An important part of commerce is business practices in general and in particular, usages of trade and understandings of the parties to the contract. Therefore, this lesson emphasizes those parts of interpretation. For a broader discussion of interpretation in contract law, see the CALI Lesson Interpretation of Contracts.

Learning Outcomes

On completion of the lesson, the student will be able to:

1. Distinguish between an agreement and a contract.
2. Describe the types of extrinsic evidence a court may admit even when the parties intended a record to contain the complete and exclusive statement of the terms of the agreement.
3. Explain what trade usage, course of dealing, and course of performance are and the hierarchy of meaning among them.