ABSTRACT
This Article examines the critical but largely unaddressed subject of commercial reasonableness. The inquiry is important because, inter alia, commercial reasonableness can signal the presence of good faith, which is an implied duty in all contracts; whereas commercially unreasonable behavior signals bad faith. A transaction that is not commercially reasonable may be unenforceable. The law nonetheless lacks clarity as to when courts should consider commercial reasonableness, what this standard means, and how it should be used and proved. This Article shows that the meaning of commercial reasonableness depends on commonly accepted business customs and practices in the relevant industry. Proof of commercial reasonableness thus usually requires expert testimony about those customs and practices, raising a normative question: Should the reasonableness of a particular business practice be decided by the existence of the practice itself? The Article answers this question in several ways. It explains that norms themselves arise from a common acceptance of reality, it observes that courts can impose their own notions of reasonableness and fairness on expert testimony, and it proposes that experts should not only testify as to actual customs and practices but also be prepared to explain whether a party’s compliance with those customs and practices should, or should not, be considered commercially reasonable under the circumstances.
Schwarcz, Steven L, Commercial Reasonableness (November 13, 2025), Duke Law School Public Law & Legal Theory Series.
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