Winston WONG (16 January 2025): Reasonable, reasonably, reasonableness
The concept of reasonableness and its various derivations often come into play, deployed as a qualifier, condition, warranty, and in varying contexts. What exactly is this apparent indistinct concept and why does it oftentimes appear in the legal context? Why was it created, why its popularity, and how will it be used in the future? These are some of the things that we will look into in this article.
Dictionary
The online Cambridge dictionary defines the above terms as follows:
Reasonable (adj): based on or using good judgment and therefore fair and practical
Reasonableness (n): the fact of being based on or using good judgment and therefore being fair and practical
Reasonably (adv): using good judgment
In everyday use, it seems, the concept of “reasonableness” centers around good judgment, and being fair and practical. We also see that the three terms are different forms of the same word or concept, being an adjective, noun, and adverb. In the legal context, do they therefore have the same meaning? We will examine Singapore written laws to learn more this concept.
The UCTA
One statute having reasonableness extensively used is the Singapore Unfair Contract Terms Act 1977. While the words “reasonable” and its derivations certainly does not have the most number of occurrences in this Act, there are 28 occurrences in a statute with 30 sections, excluding appearances in headings and titles, giving an impressive 0.933 occurrence-section value. All 3 derivations of the word are used, but noteworthy is it was decided by the legislators in 1977 that the concept of “reasonableness” would be a concept used much throughout the Act. In fact, it is common for practitioners to describe the outstanding achievement of UCTA as codifying “reasonableness” as a requirement for a B-C contract.
I will not list all occasions the word is used, but instead will mention two: It is used in section 2 for terms restricting or excluding death or personal injury resulting from negligence, stating it must satisfy the requirement of “reasonableness”. In fact in section 3 it appears twice for two different purposes: Again, in a B-C situation, the UCTA prohibits the business from using a contract term from claiming to be entitled to render a contractual performance substantially different from that which was reasonably expected of him, except where the contract term satisfies the requirement of “reasonableness”.
Section 11 defines a contract term as satisfying “reasonableness” if such term is a “fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made”. Obviously the concept that circular definitions being meaningless is not something so serious that would worry legislators in 1977 and still do not intimidate judges present day, so there section 11 continues to stand as-is.
The Penal Code
In the Singapore Penal Code 1871, “reasonable” and “reasonably” appears 61 times and 41 times, respectively. Again, like before I will list just two occurrences:
(a) in section 24, the word “reasonable” is used to define the concept of “dishonesty”, by requiring that an act is said to have been done “dishonestly” if it is seen as dishonest “by the ordinary standards of reasonable and honest persons”; and
(b) in section 26E, the term “unreasonable” is used to define someone as having acted “rashly” if, in that particular circumstance, it would have been unreasonable to have taken that risk.
Just from the two examples above, we can see that the legal definition is significantly different from the layperson’s, and further that there are differing details even between statutes. It also shows that it is common for “reasonable” is used as a barometer upon other terms are defined.
Contracts
With all of that in mind, how do we then use, and interpret the word “reasonable” when used in a contract? It really depends on who you ask that question to, and in what context it appears in a contract, what kind of contract it is used in, which persons are the contracting parties, and in what country do the contracting parties reside. A law professor, law student, a criminal lawyer, and a litigation lawyer would have very different answers to what “reasonable” means. The customer of a B-to-C contract, a party of a B-to-B contract, a large corporate conglomerate, and notary in a non-litigious jurisdiction would all have different opinions.
One might say: “It is whatever the Judge thinks it is”. A further question could be “Which Judge”? No, I do not mean to ask which Judge on the duty roster – For example, in a dispute between a French manufacturer, customers in Singapore, and New York, for an incident that occurred in Narita airport, which jurisdiction would decide what? Would you then be motivated to describe the moving parts in a legal dispute as existing in a matrix of scenarios and probabilities? Is it useful to think the variables in the matrix related by entanglement? Or perhaps a multi-dimensional bifurcation diagram with as many dimensions as there be legal variables? Would Feigenbaum universality apply to in an inquiry in the law?
Completion: The SPA
Let us take a simple obligation in a completion clause of an acquisition of business agreement:
Clause 1. “Party A shall take all action in its discretion to procure the completion of the transaction.”
Clause 2. “Party A shall take all action in its reasonable discretion to procure the completion of the transaction.”
Clause 3. “Party A shall take all reasonably necessary action in its discretion to procure the completion of the transaction.”
Clause 4. “Party A shall take all necessary action in its discretion to procure the completion of the transaction.”
Which version would you say is the most advantageous if your client is the purchaser? Which version would define action that is to be taken by Party A to be the widest, and the narrowest? Would you rank clause 2 or clause 3 as wider in terms of the action Party A is obliged to perform, or are they the same?
All of the above are drafting points that would interest corporate lawyers negotiating the completion clause. While they sound similar, it is possible they lead to differing outcomes.
Why so serious?
We adore using the word because it is indefinite yet articulate, unintelligible yet definite. I leave you with food for thought. As between clauses 3 and 4, would you interpret the word “reasonably” as reducing the obligation of Party A because Party A is only required to perform not all necessary action, but only necessary action that is reasonable? Would you think of the word “reasonably” as qualifying the definition of “necessary action”?
If so, as between clauses 1 and 2, would you think that clause 2 defines a wider set of action as compared with clause 1? Do you think that the scope of action that Party A is required to consider in clause 2 is wider than that that in clause 1? Or did you think that the word “reasonable” in clause 2 qualifies and reduces scope of action that Party A is legally bound to take?
The same word “reasonable” may have the opposite effect, one widening the scope of action, and one reducing the scope of action, in almost identical drafted sentences. What would be your thoughts on the above?
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