Which statement correctly differentiates Course of Performance from Course of Conduct?

Which statement correctly differentiates Course of Performance from Course of Conduct?

• A. Course of Performance refers to actions within the contract; Course of Conduct refers to actions on other similar contracts
• B. Course of Performance refers to industry standards; Course of Conduct refers to the contract terms
• C. Course of Performance is about time; Course of Conduct is about cost
• D. Course of Performance is optional; Course of Conduct is mandatory

Answer: (A)

The statement tests how contract interpretation uses two patterns of past behavior: performance on this contract and prior dealings. Course of Performance is about how this contract has been carried out—the actual actions, behaviors, and sequence of performance under the current agreement. This pattern helps explain or clarify what the contract requires when terms are unclear, by looking at how the parties have performed obligations, delivered work, or handled changes within this same contract. Course of Conduct, on the other hand, refers to how the parties have acted in other similar contracts with each other. Those previous dealings establish expectations or normal practice that can inform how terms are interpreted or how disputes might be resolved in the present contract. It’s about past behavior across similar engagements, not the current performance itself. So, the best choice reflects that distinction: this contract’s actions define Course of Performance, while actions on other similar contracts define Course of Conduct.

The statement tests how contract interpretation uses two patterns of past behavior: performance on this contract and prior dealings. Course of Performance is about how this contract has been carried out—the actual actions, behaviors, and sequence of performance under the current agreement. This pattern helps explain or clarify what the contract requires when terms are unclear, by looking at how the parties have performed obligations, delivered work, or handled changes within this same contract.

Course of Conduct, on the other hand, refers to how the parties have acted in other similar contracts with each other. Those previous dealings establish expectations or normal practice that can inform how terms are interpreted or how disputes might be resolved in the present contract. It’s about past behavior across similar engagements, not the current performance itself.

So, the best choice reflects that distinction: this contract’s actions define Course of Performance, while actions on other similar contracts define Course of Conduct.