A Tshirt manufacturer contracts with a new clothing store to supply 1,000 T-shirts per month for two years. The contract allows returns for non-coquelicot T-shirts, but is silent about returns for coquelicot-colored T-shirts. The contract includes a course of performance showing that the store has repeatedly returned coquelicot T-shirts for a refund over the past year without objection. Under the UCC parol evidence rule, which fact is most relevant to the store’s claim?

• A. Parol evidence prohibits such course of performance.
• B. Course of performance can be used to explain or supplement terms.
• C. Trade usage is irrelevant.
• D. Evidence of prior agreements can contradict terms.

Answer: (B)

Under the UCC, a contract can be interpreted or supplemented by evidence of course of performance when the written terms are incomplete or silent on an issue. Here, the contract doesn’t specify returns for coquelicot-colored T-shirts, creating a gap. The store’s repeated practice of returning coquelicot T-shirts for refunds without objection shows how the parties have acted in practice. That pattern is admissible to explain or supplement the contract, indicating that such returns are expected or accepted even though not expressly stated. So the most relevant fact is that course of performance can be used to explain or supplement terms. The other options misstate the rule: the parol evidence rule does not prohibit such course of performance; trade usage isn’t as directly controlling here; and prior agreements that contradict terms are not the focus when course of performance clarifies the contract.