Question

U.S. Bank enters into a new contract with Risk Management Services, Inc. (RMS), to conduct UCC searches. They have never employed an outside vendor to conduct these types of searches, though other banks frequently do. RMS adds a provision to the contract that states: "RMS’s liability is limited to the amount of fee paid for each service provided under this contract." RMS generally charges $25 per UCC search conducted. The first search conducted by RMS for U.S. Bank does not find a UCC lien, but causes U.S. Bank a $1,000,000 loss. U.S. Bank claims that the provision added by RMS is ambiguous. In this scenario, a court would look at which of the following to interpret the terms of the contract?

Answer 1

Answer:

The court will probably look at the custom usage of trades on similar contracts and provisions.

Explanation:

Usage of trade refers to business practices that are so commonly accepted and carried out that anyone can expect that they are included in the transactions.