Under the UCC, which of the following is true about parole evidence and course of performance when interpreting a contract for the sale of goods?

• A. Parol evidence cannot be used to explain any term of the contract.
• B. A course of performance can be used to explain or supplement the contract.
• C. Trade usage alone can contradict the written terms.
• D. Prior negotiations may be introduced to contradict the contract.

Answer: (B)

Under the UCC, contracts for the sale of goods aren’t read in isolation from how the parties have acted. The course of performance—the actual conduct of the parties under the contract—can be used to explain or supplement the written terms. This means if the writing is silent on a detail or its wording is ambiguous, how the parties have performed or continued to perform the contract can shed light on what they meant. The UCC also lets prior dealings and industry practices (course of dealing and usage of trade) fill gaps and clarify terms, but without allowing the writing to be contradicted if the contract is integrated. Prior negotiations or statements that would contradict the written terms generally can’t alter the contract. Therefore, using a course of performance to explain or supplement the contract is the correct approach.