Title

I.2.1 - Standard of reasonableness

Content

No. I.2.1 - Standard of reasonableness

The parties always have to act according to what is reasonable in view of the particular nature of their transaction and the circumstances involved, in particular the economic interests and expectations of the parties.

Commentary

1 The Principle is derived from the general standard of good faith and fair dealing.

2 Its application involves an objective test, taking the position of a neutral person (the "reasonable man") who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. The reasonable man can be described as a fictional businessman possessing and exercising those qualities of attention, knowledge, intelligence, and judgment that international business requires of its members for the protection of its own interests and the interests of others.

3 In legal disputes, the court or arbitral tribunal personifies the reasonable man.

References

Doctrine

Berger, Klaus Peter, The Creeping Codification of the Lex Mercatoria, The Hague, London, Boston 1999Berger, Klaus Peter, The Creeping Codification of the New Lex Mercatoriam 2nd. ed. 2010Domingo, Ortega, Rodriguez-Antolin, Zambrana, Principios de Derecho Global, Navarra, 2006Ferrari, Franco, Das Verhältnis zwischen den Unidroit-Grundsätzen und den allgemeinen Grundsätzen internationaler Einheitsprivatrechtskonventionen, JZ 1998, at 9 et seq.Ferrari, Franco, The CISG's Interpretative Goals, Its Interpretative Method and Its General Principles in Case Law (Part II), IHR 5/2013, at 181 et seq.Joachim, Willi E., The "Reasonable Man" in United States and German Commercial Law, 15 Comp.L.Yb.Int'l Bus. 1992, at 341 et seq.Jones, Peter, Reasonableness, Honesty and Good Faith, International Sales Quarterly, March 1995, at 8 et seq.Langen, Eugen, Transnationales Recht, Heidelberg 1981.Magnus, Ulrich, Die allgemeinen Grundsätze im UN-Kaufrecht, 59 RabelsZ 1995, at 469 et seq.Schlechtriem, Peter, Internationales UN-Kaufrecht, Tübingen 1996Tully, Stephen R., 'Objective Reasonableness' as a Standard for International Judicial Review, Journal of International Dispute Settlement, 2015 at Page 546 et seq.

Court Decisions

Euroption Strategic Fund Limited v. Skandinaviska Enskilda Banken AB, [2012] EWHC 584 (Comm)Socimer International Bank Limited (in liquidation) v Standard Bank London Ltd, [2008] EWCA Civ 116

Arbitral Awards

ICC Award No. 2291, Clunet 1976, at 989 et seq.

Principles / Restatements

Principles of European Contract Law - PECLUNIDROIT Principles of International Commercial Contracts 2016

Contract Clauses

Standard of Reasonableness as Limit to Execution of ContractEmployment Contract