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CMA Foundation · Fundamentals of Business Laws and Business Communication · Sources of Law

Which statement correctly distinguishes a custom from a usage (as the terms are generally treated in the study of sources of law)?

A custom is a long-settled practice that the law recognises as binding in itself, while a usage binds only when the parties have adopted it, expressly or impliedly, in their dealings. Neither is a statute or government order, and each is not confined to commercial or family matters.

  1. AA custom always has the force of statute, whereas a usage is a government order
  2. BA usage has no legal significance at all, while a custom is always binding
  3. CA custom is a long-established practice with binding legal force, whereas a usage is a practice that binds only if the parties have adopted it expressly or impliedly in their dealingsCorrect
  4. DA custom applies only to commercial dealings, whereas a usage applies only to family matters

Explanation

Custom is a settled practice recognised by law as binding independently of agreement. Usage is a practice followed in a trade or locality that becomes binding only when the parties incorporate it expressly or by implication. The other options invert or invent distinctions, such as limiting each to commercial or family matters.

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