ordinary course of business

Legal TermLegal glossary term

Legal Definition

The ordinary course of business refers to the usual, customary, or expected course of actions or transactions that a party would typically undertake in the course of their regular business operations. In legal contexts, it establishes a baseline expectation for standard commercial conduct and practice.

Plain-English Translation

Imagine this is just the normal way people do their jobs or run a business. It means doing what is usually expected when someone does their everyday work or runs their company.

Context in Contracts

It matters because it serves as a baseline for determining whether an action taken by a party is typical, reasonable, or customary within the scope of their legal obligations or contractual duties. It helps courts assess whether a deviation from the norm is a legitimate exception or a breach.

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01

The usual procedure for filing a claim under a contract.

02

The typical sequence of actions required to execute a contractual obligation.

Document context

How ordinary course of business shows up in legal documents

What is it?

The ordinary course of business is the usual, customary, or expected course of actions or transactions that a party would typically undertake in the course of their regular business operations. In contract law, it defines the standard set of actions expected under normal commercial dealings.

Why does it matter?

It matters because it serves as a baseline for determining whether an action taken by a party is typical, reasonable, or customary within the scope of their legal obligations or contractual duties. It helps courts assess whether a deviation from the norm is a legitimate exception or a breach.

When does it matter?

It usually appears when discussing the standard operational procedures, the expected sequence of business activities, or when arguing that an action taken by a party falls within the normal scope of their commercial obligations.

Where is it usually seen?

It is commonly seen in contract clauses defining the scope of duties, in litigation to establish a baseline for typical actions, and in regulatory compliance discussions where standard operational procedures are being assessed.

Who is affected?

The parties involved in a legal dispute or contractual relationship are affected, as their actions are measured against this standard. The business entity or individual whose operations are under scrutiny is the primary focus.

How does it work?

In practice, it functions as a benchmark: if an action deviates from the 'ordinary course of business,' it might be deemed outside the scope of duty, or conversely, if an action *is* the ordinary course of business, it confirms that the party has fulfilled their expected obligations.

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