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54 Marq. L. Rev. 1 (1971)
Good Faith under the Uniform Commercial Code - A New Look at an Old Problem

handle is hein.journals/marqlr54 and id is 9 raw text is: MARQUETTE LAW REVIEW
Vol. 54                    WINTER, 1971                        No. 1
GOOD FAITH UNDER THE UNIFORM
COMMERCIAL CODE-A NEW
LOOK AT AN OLD PROBLEM
RUSSELL A. EISENBERG*
INTRODUCTION
Every contract and duty included under the umbrella of the Uniform
Commercial Code' imposes upon the parties thereto an obligation of
good faith in its performance or enforcement.'2 This obligation of good
faith is without question one of the key sections of the Code.3
Furthermore, this obligation of good faith is one of the few require-
ments that cannot be varied by agreement between the parties, although
the parties may by agreement determine the standards by which the
performance of such obligations is to be measured if such standards are
not manifestly unreasonable.4
Because the definitions of good faith set forth in the Code are
very broad, and because the guidelines are few, much confusion has
resulted in determining what the term means in actual practice and how
it should be applied.
The hypotheses of this article are that: a) the requirement of good
faith under the Code is, in effect, a firm, far-reaching directive to the
*J.D. 1961, Marquette Law School; Partner, Howard, Peterman & Eisenberg,
Milwaukee, Wisconsin.
1 Good faith is a requirement of many non-Code transactions, as well. Bankruptcy
Courts, for example, have broad equity powers, and there are several important
good faith provisions in the Bankruptcy Act. See L. Salter, The Bankruptcy
Court and the Creative Imagination. 75 Com. L. J. 221 (1970), and Cont. Ill.
Nat'l. Bk. v. Chicago R. I. & P. Ry. 294 U.S. 648 (1935), Local Loan Co. v.
Hunt, 292 U.S. 234, 240 (1934), and 1 REMINGTON ON BANKRUPTCY
§22, pages 44, 46.
2 Uniform Commercial Code (hereinafter cited as U.C.C.) § 1-203. Every
contract or duty within this code imposes an obligation of good faith in its
performance or enforcement. Through judicial interpretation, the obligation
of good faith extends to the performance and enforcement of code transac-
tions.
3 E. Allan Farnsworth, Good Faith Performance and Coinmercial Reasonable-
ness Under the Uniform Commercial Code, 30 U. CHI. L. REv. 666 (1963),
hereinafter cited as Farnsworth ,Good Faith.'
4 U.C.C. §1-102 (3). The effect of provisions of this code may be varied by
agreement except as otherwise provided in this code and except that the obliga-
tions of good faith, diligence, reasonableness and care prescribed by this code
may not be disclaimed by agreement but the parties may by agreement deter-
mine the standards by which the performance of such obligations is to be
measured if such standards are not manifestly unreasonable.

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