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What is “course of performance”?

On Behalf of | Feb 20, 2018 | Contract Disputes |

Typically, when you enter into a contract with another party in Raleigh, the obligations of both sides are clearly spelled out. However, even in instances of ambiguity, if you fulfill your terms of the contract as you perceive them to be (and your partner raises no objections), then you may justly believe that you are holding up your end of the bargain. So what if your partner later comes to you and claims that (at least according to its interpretation) you never fulfilled your side of the agreement? Can they then go after you for breach of contract

A legal principle exists known as “course of performance,” which is often cited when questions over ambiguous contractual terms arise. According to North Carolina’s General Statutes, two elements must be present for you to show that course of performance may apply to your contract. The first involves repeated occasions of performance on your part. The second is your contractual partner’s knowledge of your performance with the chance to object to it. A good example may be the work of framing. You secure a contract with a developer to frame multiple residential units being built in a new subdivision. You perform the work over an extended period of time, during which time the developer observes it. The developer’s lack of objection to your work amounts to them acquiescing to what you have done. 

North Carolina law relies on factors like course of performance to interpret the nature of contractual agreements. Say, in the aforementioned example, the developer suddenly claimed that you had not been performing the work to its specifications. The court can cite course of performance in ruling that the developer’s prior failure to object to your work implies that you had indeed been fulfilling your part in the contract. 

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