This section is from the book "The Law Of Contracts", by Theophilus Parsons. Also available from Amazon: The law of contracts.
As a general rule, the knowledge of a custom must be brought home to a party who is to be affected by it. But if it be shown that the custom is ancient, very general and well known, it will often be a presumption of law that the party had knowledge of it; (q) although, if the custom appeared to be more recent, and less generally known, it might be necessary to establish by independent proof the knowledge of this custom by the party. (r) And one of the most common grounds for inferring knowledge in the parties, is the fact of their previous similar dealings with each other. (s) The custom might be so perfectly ascertained and * universal, that the party's actual ignorance could not be given in proof, nor assist him in resisting a custom. If one sold goods, and the buyer being sued for the price, defended on the ground of a custom of three months' credit, the jury might be instructed that the defence was not made out, unless they could not only infer from the evidence the existence of the custom, but a knowledge of it by the plaintiff. But if the buyer had given a negotiable note at three months, no ignorance of the seller would enable him to demand payment without grace, even where the days of grace were not given by statute. In such a case, the reason of the law of custom - that the parties contracted with reference to it - seems to be lost sight of. But in fact the custom in such a case has the force of law; (t) an ignorance of which cannot be supposed, and, if it be proved, it neither excuses any one, nor enlarges his rights.
(q) Where a custom is found to be general and notorious, and to have the other requisites of a valid custom, it is a conclusion of law that the parties must hare contracted with reference to it, and their knowledge is conclusively presumed. In Clayton v. Gregson, 6 A. & E. 302, an arbitrator found, that according to the custom and understanding of miners throughout a certain district, the words "level," "deeper than," and "below," in a lease, had certain meanings, which were in favor of one of the parties to the suit. Some of the parties to the lease did not live within the district. Held, that the existence of the custom stated, within such district, did not raise a conclusion of law that the covenanting parties used the terms according to such custom, but was only evidence from which a jury might draw that conclusion. Littledale, J., said: "If the arbitrator had followed the words of the order, and found that the word 'level' (which is capable of many different meanings), meant, 'according to the custom and understanding of miners' so and so; judgment might have been given for the defendant; there would have been a result in law in his favor. But the finding is limited to a particular district; which is as much as to say that the word which has a particular signification in this district may mean differently in others; and if that be so, it cannot follow as an inference of law, that in the present contract it was used in the sense pointed out. It ought therefore to be shown, as a matter of fact, that the parties so used it" See also Stevens v. Reeves, 9 Pick. 198; Hinton v. Locke, 6 Hill, 439; Deshler v. Beers, 32 Ill. 68. But see Winsor v. Dillaway, 4 Met 221.
(r) Clayton v. Gregson, 5 A. & E. 302; Scott v. Irving, 1 B. & Ad. 605; Stevens v. Reeves, 9 Pick. 198; Stewart v. Aberdein, 4 M. & W. 211; Goodnow v. Parsons, 36 Vt. 46.
(s) As that one of the parties was accustomed to effect insurance at a certain place or with a certain company. Gabay v. Lloyd, 3 B. & C. 793; Bartlett v. Pentland, 10 B. & C. 760; Palmer v. Blackburn, 1 Bing. 61. Or that parties were accustomed to transact business at a certain bank. Bridgeport Bank v. Dyer, 19 Conn. 136. Or that the parties reside at the place where the usage exists. Bartlett v. Pentland, 10 B. & C. 760; Clayton v. Gregson, 6 A. 4 E. 303; Stevens v. Reeves, 9 Pick. 198. Evidence may be given of former transactions between the same parties for the purpose of explaining the meaning of the terms used in a written contract. Bourne v. Gatliff, 11 Clark & F. 45,70. But see Ford v. Yates, 2 Man. & G. 549, where evidence was rejected, that by the usual course of dealing between the parties, hops were sold on a credit of six months. The written contract was silent upon the subject Previous dealings of parties are admissible, to give a more extended lien than that given by the common law. Rushforth v. Hadfield, 7 East, 224. See Loring v. Gurney, 5 Pick. 15.
No custom can be proved, or permitted to influence the construction of a contract, or vary the rights of parties, if the custom itself be illegal. For this would be to permit parties to break the law because others had broken it; and then to found their rights upon their own wrong-doing. (u)
Neither would courts sanction a custom, by permitting its operation upon the rights of parties, which was in itself wholly unreasonable. (v) In relation to a law, properly enacted, this inquiry cannot be made in a country where the judicial and the legislative powers are properly separated. But in reference to custom, which is a quasi law, and has often the effect of law, but has not its obligatory power over the court, the character of the custom will be considered; and if it be altogether foolish, or mischievous, the court will not regard it; and if a contract exist which only such a custom can give effect to, the contract itself will be declared void.
(t) It may, however, be superseded by a custom allowing four days' grace. Mills v. Bank of United States, 11 Wheat. 431; Cookenderfer v. Preston, 4 How. 817.
(u) See 1 Duer on Ins. 272. Also Wallace v. Fouche, 27 Miss. 266.
(v) A usage among the owners of vessels at particular ports, to pay bills drawn by masters for supplies furnished to their vessels in foreign ports, cannot bind them as acceptors of such bills. "A usage, to be legal, must be reasonable as well as convenient; and that usage cannot be reasonable which puts at hazard the property of the owners at the pleasure of the master, by making them responsible as acceptors on bills drawn by him, and which have been negotiated on the assumption that the funds were needed for supplies or repairs; and no evil can flow from rejecting such a usage." Per Hubbard, J., in Bowen v. Stoddard, 10 Met. 375. So a usage among plasterers, to charge half the size of the windows at the price agreed on for work and materials, is unreasonable and void. Jordan v. Meredith, 3 Yeates, 318. See also Thomas v. Graves, 1 Const. R. 308; Spear v. Newell, cited in Burton v. Blin, 23 Vt. 159; Bryant v. Commonwealth Ins. Co. 6 Pick. 131. For instances in which usages have been held reasonable, see Clark v. Baker, 11 Met 186; Thomas v. O'Hara, 1 Const. R. 303; Williams v. Gilman, 3 Greenl. 276; Bridgeport Bank v. Dyer, 19 Conn. 136; Connor v. Robinson, 2 Hill (S. C), 354; Cuthbert v. Cumming, 11 Exch. 405, 30 Eng. L. & Eq. 604. Whether a usage is reasonable would seem to be a question of law. 1 Duer on Ins. 269. See remarks of Tindal, C. J., in Bottomley v. Forbes, 5 Bing. N. C. 127. And see Bowen v. Stoddard, 10 Met 375. The question of the reasonableness of a usage was left to the jury by Lord Eldon, in Ougier v. Jennings, 1 Camp. 505, note (a).
 
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