This section is from the book "The Law Of Contracts", by Theophilus Parsons. Also available from Amazon: The law of contracts.
It is obvious that the word "custom" is used in many senses, or rather that it embraces very many different degrees of the same meaning. By it may be understood, either that ancient and universal, and perfectly established custom, which is in fact law; or only a manner of doing some particular thing, in a small neighborhood, or by a small class of men, for a few years; or any measure of the same kind of meaning within these two * extremes. Nor is it material what the custom is in this respect, provided it falls within the reason of the rule which makes it a part of the contract. And it comes within this reason only when it is so far established, and so far known to the parties, that it must be supposed that their contract was made in reference to it. For this purpose, the custom must be established and not casual, uniform and not varying, general and not personal, and known to the parties. (k)1 But the degree perfect notions of the subject; and therefore it should, as I think, be admitted with a cautious reluctance and scrupulous jealousy, as it may shift the whole grounds of the ordinary interpretation of policies of insurance and other contracts." See also remarks of the same learned judge, in the Schooner Reeside, 2 Sumner, 667; Hone v. Mutual Safety Ins. Co.
1 Sandf. 187; per Tilghman, C J., in Stoever v. Whitman, 6 Binn. 410; per Gibson, C. J., in Snowden v. Warder, 3 Rawle, 101; Bolton v. Colder, 1 Watts, 363.
(j) 2 Inst. 18. (k) Usage or custom must be established. Those customs which can be incorporated into contracts, on the ground
1 A custom in a particular market that a broker who has purchased and is purchasing goods of a particular kind, in his own name, may take portions of those goods and supin which * these characteristics must belong to the custom, will depend in each case upon its peculiar circumstances. Suppose a contract to be entered into for the making of an article which has not been made until within a dozen years, and only by a dozen persons. Words are used in this contract, and their meaning is uncertain; but it is proved that these words that the parties must have contracted in reference to them, differ from the local customs of the common law in the length of time they must have existed to be valid. "The true test of a commercial usage is its having existed a sufficient length of time to have become generally known, and to warrant a presumption that contracts are made in reference to it." Per Curiam, in Smith v. Wright, 1 Caines, 48. In Noble v. Kennoway, 2 Doug. 610, where the usage established by evidence had existed for three years, Lord Mansfield said: "It is no matter if the usage has only been for a year." So, a usage as to the measurement of morus multicaulis trees has been incorporated into a contract, although the trade in such trees has existed only for a short time. Barton v. McKelway, 2 N. J. 166. See also Dorchester and Milton Bank v. New England Bank, 1 Cush. 177; Taylor v. Briggs, 2 C. & P. 626. But see Robertson v. Jackson, 2 C. B. 412; Singleton v. Hilliard, 1 Strob. 208; Lewis v. Marshall, 7 Man. & G. 720; Hayward v. Middleton, 8 McCord, 121; Rapp v. Palmer, 8 Watts, 178. - Usage must be uniform. It must constantly be observed in the same manner. In Wood v. Wood, 1 C. & P. 60, a usage was attempted to be shown relative to the return of cloths sent for inspection. Some of the witnesses spoke of three days as the time within which the buyer was to say whether he would buy them or not; others spoke of a week, and one of a month, as the time. The judge instructed the jury, that such a usage, to be binding, must be uniform, and that the usage proved was not so. The jury found accordingly. The usage must not be fluctuating and dependent upon price. Lawrence v. McGregor, Wright, 108. The observance of the usage must not be occasional. The Paragon, Ware, 322; Rushforth v. Hadfleld, 7 East, 224. See also Trott v. Wood, 1 Gallis. 448; Martin v. Delaware have been used and understood in reference to this article, always, by all who have ever made it, in one way, and that both parties to the contract knew this; then this custom will be permitted to explain and interpret the words of the parties. But if the article had been made a hundred years, in many countries, and by multitudes of persons, the same evidence of this use of the words, by a dozen persons for a dozen years, might not be sufficient to give to this practice all the force of custom. Other facts must be considered; as how far the meaning sought to be put on the words departs from their common meaning as given by the dictionary, or by general use, and whether other makers of this article used these words in various senses, or used other words to express the alleged meaning. Because the main question is always this: Can it be said that both parties must have used these words in this sense, and that each party had good reason to believe that the other party so understood them?
Ins. Co. 2 Wash. C. C. 254; Rapp v. Palmer, 3 Watts, 178. Single isolated instances, unaccompanied with proof of general usage will be insufficient to establish a custom. Cope v. Dodd, 13 Penn. St. 33; United States v. Buchanan, 8 How. 83,102. - Usage must be general. In order that a custom may be incorporated into an agreement, by force of its existence, it must be shown to be so general, that a presumption of knowledge on the part of the parties arises. It must be general as opposed to local, for local usages cannot be brought in to affect the construction of written instruments, unless the knowledge of the parties is found. Bartlett v. Pentland, 10 B. & C. 760, 770; Gabay v. Lloyd, 3 id. 793; Scott v. Irving, 1 B. & Ad. 605; Stevens v. Reeves.
9 Pick. 198; Clayton v. Gregson, 6 A. & E. 302. A usage, however, may be local in the sense of being confined to a particular port or place, and yet general in reference to the persons engaged in the trade in question. Baxter v. Leland, 1 Blatchf. C. C. 626. Where a usage between insurers and insured is offered in evidence, it must be the usage of the port where the policy is effected. Rogers v. Mechanics Ins. Co. 1 Story, 607; Child v. Sun Mutual Ins. Co. 8 Sandf. 26. - The usage must be general as opposed to partial, or personal. Where it has reference to the commercial meaning of a word, or to a usage of trade proper, that is, to a particular manner of doing a thing, it must be general among all those merchants, in the same country, by whom the word is used, or who are engaged in the trade in question. Martin v. Delaware Ins. Co. 2 Wash. C. C. 254, Trott v. Wood, 1 Gallis. 443; Macy v. Whaling Ins. Co. 0 Met. 354, 365; Wood v. Wood, ply them to principals, who have employed him in his character of broker to buy such goods for them, is one of a peculiar nature, and cannot be supported as against a principal not proved to have been acquainted with it when he gave his order; and the mere fact of employing a broker to execute a commission as a broker, in a market where such a usage prevails, will not make the principal liable under it Robinson v. Mollett, L. R.
 
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