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84-1-205. Reasonable time; seasonableness. (a) Whether a time for taking an action required by the uniform commercial code is reasonable depends on the nature, purpose, and circumstances of the action.

(b) An action is taken seasonably if it is taken at or within the time agreed or, if no time is agreed, at or within a reasonable time.

History: L. 2007, ch. 89, § 13; July 1, 2008.

KANSAS COMMENT, 1996

1. This section defines the key phrases "course of dealing" and "usage of trade," which become part of every agreement under the Code. See 84-1-201(3). These concepts provide the commercial context of the contract and the background through which the formal or written provisions of the contract are to be read.

2. Subsection (1) defines "course of dealing." This term refers to prior, pre-contract conduct between the parties to a current contract. See Olathe Mfg., Inc. v. Browning Mfg., 259 K. 735, 915 P.2d 86 (1996) (sending catalogs to buyer did not constitute course of dealing such that remedy limitation contained in catalog became part of agreement); Geo C. Christopher & Son, Inc. v. Kansas Paint & Color Co., 215 K. 185, 523 P.2d 709, modified on rehearing, 215 K. 510, 525 P.2d 626 (1974) (rejecting argument that disclaimer contained in certain invoices became part of contract since parties had engaged in similar previous course of dealing). The statutory definition requires a " sequence of previous conduct." See Aero Consulting Corp. v. Cessna Aircraft Co., 867 F. Supp. 1480 (D. Kan. 1994). Thus, a single instance cannot constitute a course of dealing. "Course of dealing" should be distinguished from "course of performance," defined in 84-2-208, and which is applicable only to Article 2. A "course of performance" refers to the ongoing performance of a current contract, whereas "course of dealing" refers to previous, pre-contract conduct.

3. Subsection (2) defines "usage of trade." This provision changes much former Kansas law. The most obvious change is in terminology, since the former term "custom" is no longer used. In addition, the test for establishing the existence of a usage of trade has been changed. Official Comment 5 notes that a usage of trade need only have a "regularity of observance." There is no requirement that a usage be "ancient or immemorial," "universal," or the like. Thus, pre-Code cases such as Jarecki Mfg. Co. v. Merriam, 104 K. 646, 180 P. 224 (1919) are overruled. In addition, pre-Code Kansas cases have often required that a custom be established by clear and convincing evidence. See Jarecki Mfg. Co. v. Merriam, supra; Radio Station KFH Co. v. Musicians Ass'n Local No. 297, 169 K. 596, 220 P.2d 199 (1950). This standard may no longer apply under the Code, since subsection (2) provides that the existence and scope of a trade usage are to be proved as facts, presumably by a preponderance of evidence as with other facts. See 84-1-201(8) (defining "burden of establishing"). In Wendling v. Puls, 227 K. 780, 610 P.2d 580 (1980), the court continued to discuss the old concept of "custom" and required clear and convincing evidence to prove its existence. This section, however, was not cited. It is not necessary that the parties actually know of a trade usage for it to apply to their agreement. Instead, subsection (3) requires only that the usage be one of the trade in which they are engaged or of which they are or should be aware.

4. Under subsection (3), usage of trade and course of dealing become part of the agreement and may supplement the parties' agreement by supplying a missing term. See Wayman v. Amoco Oil Co., 923 F. Supp. 1322 (D. Kan. 1996); see also 84-1-201(3) and 84-2-202(a) (course of dealing and usage of trade admissible even when contract completely integrated). They also are relevant in interpreting the express terms of the parties' agreement. Indeed, subsection (5) requires that a usage of trade in the place where any part of performance is to take place "shall be used" to interpret the agreement as to that part of the performance. However, a usage of trade "cannot be used to create a contract where none previously existed." See Wichita Sheet Metal Supply, Inc. v. Dahlstrom & Ferrell Constr. Co., 246 K. 557, 792 P.2d 1043 (1990).

5. Subsection (4) establishes the hierarchy to be applied when these terms conflict with each other. See also 84-2-208(2) (incorporating "course of performance" into the hierarchy). This subsection provides that a course of dealing between the parties controls over a conflicting usage of trade. This ranking makes sense, since presumably the prior dealings between the parties are a better indication of their intent than a usage of trade. See also Kansas Comment 1996 number 3 to 84-2-208. While this subsection makes clear that a conflicting express term would control over both a course of dealing and a usage of trade, it should be noted that all express terms are to be read in light of course of dealing and usage of trade and construed as consistent whenever possible. See Wayman v. Amoco Oil Co., supra; see also 84-2-208(3) (express term might be waived by inconsistent course of performance).

6. Subsection (6) requires that a party who wishes to rely on a usage of trade give notice to the other as a pre-condition for admission of evidence concerning the usage of trade. This provision apparently abolishes the pre-Code requirement that usage of trade (or "custom") be specially pleaded. See Rains v. Weiler, 101 K. 294, 166 P. 235 (1917); First Nat'l Bank in Dodge City v. Keller, 193 K. 581, 396 P.2d 304 (1964). However, the safest course would be to give notice as soon as possible, and notice in a pleading, such as an answer, is sufficient. See Torstenson v. Melcher, 195 Neb. 764, 241 N.W.2d 103 (1976). Any notice sufficient under subsection (6) serves the same purpose as special pleading, and a party who gives adequate notice should not be denied a chance to prove the usage of trade. Of course, the notice must be timely; an offer to prove a usage of trade which comes late in the trial will be denied. Paymaster Oil Mill Co. v. Mitchell, 319 So.2d 652 (Miss. 1975).

7. In several Kansas cases dealing with farm financing, the courts have adopted and applied the concept "course of conduct." This term does not appear in the Code, but, as used by the courts, this term seems analogous to "course of performance" under 84-2-208. However, the courts usually cite this section (84-1-205) when they discuss "course of conduct." In each of the cases, a pattern of behavior, or course of conduct, by the secured party was held not to amount to a waiver of an express term of the contract. See North Central Kansas Prod. Credit Ass'n v. Washington Sales Co., Inc., 223 K. 689, 577 P.2d 35 (1978); North Central Kansas Prod. Credit Ass'n v. Boese, 2 K.A.2d 231, 577 P.2d 824, aff'd, 588 P.2d 491 (1978); Security Nat'l Bank v. Belleville Livestock Comm'n Co., 619 F.2d 840 (10th Cir. 1979); see also Utica Nat'l Bank & Trust Co. v. Associated Producers Co., 622 P.2d 1061 (Okla. 1980) (applying Kansas law) (court used term "course of conduct" in holding that bank had relinquished its security interest in certain funds).

Revisor's Note:

Former section 84-1-205 was repealed by L. 2007, ch. 89, § 49 and the number reassigned to the current text.

Law Review and Bar Journal References:

The UCC and law of contracts, William G. Zimmerman, 14 K.L.R. 509, 514, 516 (1966).

Applicability of implied waiver doctrine to article 9 transactions, "Uniform Commercial Code: Farm Creditor Protection," Brian McMahill, 18 W.L.J. 199 (1978).

"Survey of Kansas Law: Contracts," Mary Kathleen Babcock, 27 K.L.R. 215, 218 (1979).

"Agricultural Credit and The Uniform Commercial Code: A Need for Change?" Keith G. Meyer, 34 K.L.R. 469, 480 (1986).

CASE ANNOTATIONS

1. Applied; action to recover on implied warranty; disclaimer made after date of contract inadmissible. Christopher and Son v. Kansas Paint and Color Co., 215 Kan. 185, 191, 523 P.2d 709. Modified: 215 Kan. 510, 525 P.2d 626.

2. Applied; under facts there was no conversion where collateral sold at direction of the debtor who received proceeds; consent. North Cent. Kan. Prod. Cred. Ass'n v. Washington Sales Co., 223 Kan. 689, 692, 577 P.2d 35.

3. Title to goods under 84-2-105 and 84-2-401 cannot pass under a contract for sale prior to their identification to the contract. Reeves v. Pillsbury Co., 229 Kan. 423, 429, 625 P.2d 440.

4. Bank did not impliedly waive security interest in cattle sold by its debtor by custom of accepting proceeds of unauthorized sale of cattle covered by security agreements. Security Natl. Bank v. Belleville Livestock, 619 F.2d 840, 846.

5. Invoices relevant to limitation of remedies issue based on course of dealing. Transamerica Oil Corp. v. Lynes, Inc., 723 F.2d 758, 765 (1983).

6. Cited; whether security agreement may be altered by course of dealing examined. Riley State Bank v. Spillman, 242 Kan. 696, 700, 750 P.2d 1024 (1988).

7. Extent of coverage under contractors' bonds (60-1111) and mechanic's lien statute (60-1103) examined. Wichita Sheet Metal Supply, Inc. v. Dahlstrom & Ferrell, 14 Kan. App. 2d 111, 117, 783 P.2d 353 (1989).

8. Intent of statute in understanding commercial meaning examined; statute not intended to create contract where none exists. Wichita Sheet Metal Supply, Inc. v. Dahlstrom & Ferrell Constr. Co., 246 Kan. 557, 565, 792 P.2d 1043 (1990).

9. Whether buyer's course of dealing evidence could be used to establish additional contract terms examined. Aere Consulting Corp. v. Cessna Aircraft Co., 867 F. Supp. 1480, 1490 (1994).

10. Seller's limitation of remedies not established by course of dealing. Olathe Mfg., Inc. v. Browning Mfg., 259 Kan. 735, 753, 755, 915 P.2d 86 (1996).

11. Whether extrinsic evidence constitutes a course of dealing, usage of trade or a course of performance is a factual inquiry. Cravotta v. Deggingers' Foundry, Inc., 42 Kan. App. 2d 700, 215 P.3d 636 (2009).


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