I’ve previously considered reasonableness and good faith. (See MSCD 13.557 and this 2011 post.) Now it’s time to think about fairness.
Just to set the scene, here’s how Black’s Law Dictionary (9th ed. 2009) defines fair:
fair, adj. (bef. 12c) 1. Impartial; just; equitable; disinterested <everyone thought that Judge Jones was fair>. 2. Free of bias or prejudice <in jury selection, the lawyers tried to select a fair and impartial jury>.
In contracts on the SEC’s EDGAR system, the word fair occurs most often in the phrase fair market value and its variants. But you also see fair used in connection with processes involving competing interests:
… the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date from the Outstanding Securities of such series having such terms not previously called for redemption … by the Trustee by a method the Trustee deems to be fair
The Manager shall will act in a fair
and reasonablemanner in allocating investment and trading opportunities among the Account and any Reference Account.
It’s often the case that fair is paired with another adjective. I suggest that if fair works in the above examples, you can safely eliminate its companion. In particular, I suggest that in this context fair is a subset of reasonable.
In contexts that don’t involve competing interests, I’d get rid of fair:
… insofar as such statements summarize legal matters, agreements, documents or proceedings discussed therein, are accurate
and fairsummaries of such legal matters, agreements, documents or proceedings.
But you have to be on the lookout for use of fair in terms of art, as in the accounting phrase a true and fair view:
Its Original Financial Statements (if any) give a true and fair view of its consolidated financial condition and operations as at the end of and for the relevant financial year and of the profit of the Group for that year.
Although a true and fair view is annoyingly clumsy, I’d be cautious about meddling with it.
I’ve also see fair used in ways that have me scratching my head. For example:
The Parties acknowledge, warrant and represent that the Parties and their counsel have each participated in the drafting of this Agreement and each provision hereof, that the Agreement shall be construed as a whole according to its fair meaning.
The bottom line: Use fair when referring to value and in the context of competing interests. In other contexts, it’s likely that reasonable would be a better alternative.