Good Faith and Commercially Reasonable Manner - CSA Provision

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ISDA 1995 English Law Credit Support Annex


In a Nutshell Section 9(b):

9(b) Good Faith and Commercially Reasonable Manner. The parties must perform all obligations under this Annex, in good faith and in a commercially reasonable manner.
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1995 CSA full text of Section 9(b):

9(b) Good Faith and Commercially Reasonable Manner. Performance of all obligations under this Annex, including, but not limited to, all calculations, valuations and determinations made by either party, will be made in good faith and in a commercially reasonable manner.
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Related Agreements
Click here for the text of Section 9(b) in the 1995 English Law CSA
Click here for the text of Section 9(b) in the 2016 English Law VM CSA
Click [[{{{3}}} - NY VM CSA Provision|here]] for the text of the equivalent, Section [[{{{3}}} - NY VM CSA Provision|{{{3}}}]] in the 2016 NY Law VM CSA
Comparisons
1995 CSA and 2016 VM CSA: click for comparison
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Whether a merchant should commit himself to dealing in good faith, or in a commercially reasonable manner, is one that vexes a surprising number of attorneys. Especially American ones. The only discomfort it should occasion is to a solicitor’s livelihood, for this magic expression, while doing no more than articulating the basic commercial outlook of a good egg, puts many a tedious negotiation to the sword. Everyone benefits but the officers of Her Majesty's courts.

A contract is a bond of trust. How would a merchant explain to his counterparty that he wished to reserve for himself the right to act in bad faith?

As for commercial reasonableness, and that objection I can already see you formulating that it admits shades of doubt, and encourages litigation - well, the great case of Barclays v Unicredit should be a source of great succour to you.

And for you Americans, for whom Barclays v Unicredit is of persuasive value only, there is the fact that this standard is written into the Uniform Commercial Code. and the 1994 NY CSA.

See also