It is commonplace among various industries in South Africa that certain behaviours or understandings have become so widespread that it is an assumption they form part of any commercial transaction within that particular industry. However, such practices (legally known as ‘trade usages’) should be treated with caution. This article will detail the requirements which must be met in order for a trade usage to enjoy legal enforceability.

The most common trade usages are phrases often associated with international shipping. These terms, often referred to as the Incoterms after the series of pre-defined terms produced by the International Chamber of Commerce, are extremely commonplace in international sale of goods transactions. They operate to vary the transfer of risk when goods are transported, and are so well-known that often the mere mention of an abbreviation in a contract’s terms is sufficient for all parties to understand the particular rules relating to risk. A common example of this is Free-On-Board (FOB), wherein risk passes once the goods are on board a particular vessel.

Not all trade usages are this widespread. Where found, they are automatically included in any contractual terms by operation of the law. However, courts have established an extremely high standard to be met in order for such incorporation to occur.

• The applicability of trade usages

When it is suggested that there is a trade usage that formed part of the naturalia of a contract the courts have developed a high burden for the person alleging such trade usage. In Golden Cape Fruits (Pty) Ltd v Fotoplate (Pty) Ltd Corbett J, as he then was, remarked the following requirements for showing a valid trade usage:

‘Nevertheless, despite its ignorance, appellant would be bound by and

the contract in question would be subject to the alleged trade usage provided that it is shown to be universally and uniformly observed within the particular trade concerned, long established, notorious, reasonable and certain, and does not conflict with positive law (in the sense of endeavouring to alter a rule of law which the parties could not alter by their agreement) or with the clear provisions of the contract.’

In Catering Equipment Centre v. Friesland Hotel, Erasmus J held that

"In order to prove such a trade custom, the same degree of proof is required as is necessary to prove the existence of a custom in our law . . ."

The establishment of a custom which enjoys force of law requires evidence by the person alleging the usage, which proves beyond a reasonable doubt the existence of the custom, as remarked by Solomon JA in van Breda v. Jacobs: 

‘Much must in every case be left to the discretion of the Court, which, however, must be satisfied beyond any reasonable doubt that the alleged custom does in fact exist. It is desirable, however, to add that it is better for him who sets up a custom to err on the side of calling too many rather than too few witnesses.’

In proving a trade usage, the courts found that the same degree of proof as is necessary to prove the existence of a custom in our law is required. The establishment of a custom which enjoys force of law requires evidence by the person alleging the usage, which proves beyond any reasonable doubt the existence of the custom. 

This burden to prove lies with the party alleging the existence of the trade usage, and is onerous. Any party which relies on a particular trade usage should do so with knowledge that the evidence exists proving beyond a reasonable doubt not only that the trade usage exists, but each element of the Golden Cape Fruits requirements is met. In the case of any doubt, parties are well advised to include the particular trade usage or the effect thereof as an express term of the contract.