Using “Reasonable” and “Reasonably” in Contracts

In my recent post on moral turpitude, I noted that I found odd the phrase “its reasonable but good faith opinion,” and a couple of commenters weighed in on that. So I thought I should take a more general look at the relationship between those two concepts.

But I’ll start by considering in this post how the notion of reasonableness is used in contracts.

Let’s consider what reasonable means. Black’s Law Dictionary gives as a definition “Fair, proper, or moderate under the circumstances.” Nothing surprising about that, but note in particular “under the circumstances.” Determining whether someone has behaved reasonably is an objective standard—you consider the circumstances, not the intent of the actor.

Reasonableness appears in contracts in the form of the adjective reasonable and the adverb reasonably. Here are some examples:

Reasonable

  • Vital will separately charge such surgeons a reasonable fee for any such services
  • the amount of any reasonable reserve established in accordance with GAAP
  • The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing

Reasonably (modifying a verb)

  • in each case acting reasonably to accomplish the purposes of this Section 2.16
  • other matters as the relevant L/C Issuer reasonably requests
  • as any Agent, Lender or group of Lenders reasonably determine are necessary

Reasonably (modifying another adverb)

  • Lessee shall reasonably promptly cause an inspection of the Leased Property

Reasonably (modifying an adjective)

  • and reasonably satisfactory to the Administrative Agent
  • an amount reasonably necessary to satisfy the emergency need
  • nor has there occurred any event which is reasonably likely to result in a material adverse change

Use of reasonable is straightforward enough, but reasonably raises some issues.

Reasonably can be paraphrased as “in a reasonable manner/way.” But that works only when reasonably is used with a verb. When reasonably is used other than with a verb, drafters can lose sight of what they’re trying to say.

Sometimes reasonably is superfluous. Consider reasonably promptly. MSCD 12.261 says that “courts have uniformly held that promptness is a function of circumstances.” That being the case, reasonably is redundant.

How about reasonably likely? The meaning most offered for likely—itself worth a blog post—is a degree of probability greater than 50%. In that context, what on earth does reasonably mean? I suggest that it’s acting as a wishy-washy qualifier, like quite. It’s unhelpful—if you have to use likely, use it on its own.

And what about reasonably necessary? Something is necessary, or it’s not. What purposes does reasonably serve? Here’s what I suspect the drafter of the fragment quoted above was trying to say: an amount necessary to satisfy the emergency need, as determined by a reasonable person in the Participant’s position.

As for reasonably satisfactory, MSCD 12.335 says that it’s a succinct way of making it clear that an objective standard is intended. But I wonder whether a clearer alternative to reasonably satisfactory to Acme would be satisfactory to a reasonable person in Acme’s position.

So, drafters, I recommend that if you find yourself using reasonably other than with a verb, think what you’re trying to say. If you do in fact need to express the notion of reasonableness, consider whether you can do so more clearly than by means of reasonably with an adverb or adjective.

[Updated April 25: Reasonably can also be redundant when used with a verb. Consider Acme shall cooperate reasonably with Widgetco: in that context, reasonably is redundant, as reasonableness is inherent in the notion of two parties cooperating.]

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.