Template:Good faith capsule

“Good faith and commercially reasonable manner” as a general standard

Whether a merchant should commit himself to dealing in good faith, or in a commercially reasonable manner, or both, is one that vexes many of our learned friends. Especially those in America. The only discomfort it should occasion is to a solicitor’s livelihood, for this magic expression, while doing no more than articulating the commercial imperative and the basic commercial outlook of a good egg, puts many a tedious negotiation to the sword.

Everyone benefits but officers of Her Majesty's — or (cough) the People’s — courts.

“In good faith and a commercially reasonable manner” cuts the crap and promises to unlock some negotiations and take the tedious line-by-line muck-raking out of others. It only presents litigation risk to clients who don’t trust you — and here you have bigger problems, frankly — or whom you don’t trust — also not without issues. Here, your problem is not that you have a good faith obligation; it’s that you have a lousy client relationship. It hardly affects litigation risk in any case: An unhappy client will take action either way, and will argue a lack of good faith in any case.

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, for you the great case of Barclays v Unicredit should be a source of succour.

And for you Americans, for whom Barclays v Unicredit is of persuasive value only, there is the fact that “in good faith and a commercially reasonable manner” is written into the Uniform Commercial Code should bend your ear: if it is okay there — and in the 2016 NY Law VM CSA — why not elsewhere?