Law

Fact-checked

In Law, what is the Ordinary Course of Business?

Mary McMahon

Last Modified Date: March 05, 2024

The ordinary course of business is anything that falls within the scope of activities that would be considered normal for a business. When the legality or legitimacy of transactions is challenged, one of the tests used to determine whether the challenge has merit is to examine the transaction to see if it was within the ordinary course of business. Legal codes pertaining to business matters usually define this terminology for the benefit of people involved in legal disputes, and there may be further definitions in the areas of the legal code that cover specific industries.

In order to be within the ordinary course of business, a transaction must adhere to the practices and customs that are considered normal for an industry. It would not be unusual for businesses in the same industry to engage in transactions similar to a transaction under examination. All parties also engaged in the transaction in good faith, with the understanding or belief that the other party was operating within the law and that the transaction was normal.

When grocery stores sell produce to consumers, it is considered an 'ordinary course of business'.

Thus, buying a sack of oranges at the grocery store is considered a transaction that is well within the ordinary course of business; grocery stores usually sell produce. Conversely, purchasing financial products from a hairdresser would not be, because this type of transaction is not normal for hairdressers and it does not fall within the standards and practices that one would expect to see in a salon. In the case of financial products, where there are regulations about who can sell such products and in what settings, the hairdresser may have been fraudulently representing him or herself in the transaction.

When a transaction is contested and it is not considered ordinary given the situation, the transaction may be invalidated, as will agreements associated with it. Conversely, a business defending itself from a charge that a transaction is not valid can provide evidence that it was, in fact, within normal parameters for the industry. If the court agrees, the transaction will be allowed to stand, as will an obligations associated with it.

Determining whether something is within the ordinary course of business or not can involve evaluating similar types of businesses and industries to see if they engage in similar types of transactions. Other tests can include questioning the parties to the transaction and checking regulations to see if they outline any practices for a given profession or industry.

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a MyLawQuestions researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Learn more...

Mary McMahon

Learn more...

AS FEATURED ON:

Discussion Comments

matthewc23

September 9, 2011

@jcraig - It sounds like they may have just been trying to rip you off. Have you considered going to court with it and filing a complaint under them not following the ordinary course of business? If you were to take this route I would suggest that you make sure you fully followed their warranty protocol as well as showed that you were not at fault for the second computer going bad.

If you were to sue that company for not following ordinary course of business because they decide to claim that you may have a very good chance of winning your case. I would consult a lawyer that deals with these cases and make sure that you tell him of their deceptive practices.

jcraig

September 8, 2011

@matthewc23 - I still think they may have flimflammed me. They were very difficult with me from the beginning and it took them a very very long time for them to even say they would look at my computer and when they did they said that there was a serious problem with it and they would fix it. After the replacement they sent me went bad they claimed that I had violated the ordinary course of business by accepting the replacement. I can understand them saying that if I had attempted to fix the computer on my own and then told them it was broken but they just flat out said that I could not accept two replacements. It was incredibly strange and I will never buy anything from them ever again if they are going to stretch the meaning of ordinary business practices.

matthewc23

September 8, 2011

@jcraig - I do not know what they meant by that because I do not know all the details to the situation, but the only thing that I can think of is that they somehow determined that you violated some agreement that was within the fine print of their policies that they considered for them to not be ordinary course of business.

Say you were to request something from them that is not something a computer company would usually do then and that was the basis of your complaint they may have felt that they should not help you because they have no legal obligation.

Then again there is always the possibility that they just simply used that phrase to sound official and put the blame on you because they did not want to compensate you for your broken computer.

jcraig

September 7, 2011

I once bought a computer from a certain company and it went bad. It was still under warranty and they fully replaced it for free. However, the computer they sent me went bad within a week of me receiving it and they said my warranty was voided because I had violated the ordinary course of business.

I still to this day do not know what they meant by ordinary course of business concerning my situation and I just believe that I got flimflammed after reading the meaning of it in this article.