Legal Memorandum: Contract Clause by Usage of Trade in MA

Issue: Under the laws of Massachusetts, may a clause become part of the contract because it was consistent with the usage of trade?

According to Mass. Gen. Laws Ann. ch. 106, § 1-205(2) (West 1990), a usage of trade is a practice or method of dealing that is regularly observed in a place or vocation so as to justify the expectation that it will be carried out in such a manner.

In Delano Growers Coop. Winery v. Supreme Wine Co., 393 Mass. 666, 473 N.E.2d 1066 (1985), the court examined the course of dealing between the wine growers’ cooperative and Supreme Wine Company.  Supreme had purchased wine in bulk from Delano, which it then bottled and sold.  Customers began complaining about the wine and returning it.  Testing revealed that the wine contained a Fresno mold.  Delano treated the returned wine and the remaining bulk wine in order to rid it of the Fresno mold.  Delano sold the treated wine for less money.

Delano sued Supreme for wine sold and delivered and Supreme counterclaimed, suing for breach of warranty for the wine containing Fresno mold.  The court found that all wine contained this mold and the growers could control it. Delano argued that Supreme had failed to follow industry standards in making the unmerchantable wine saleable and, thus, should have been barred from recovery against Delano.  However, the court noted that Delano failed to establish that the usage of trade in the industry was applicable to Supreme because Supreme had engaged in the same course of dealing with Delano for several years and had never had this problem with […]