Also known as: reasonable commercial practice · commercially reasonable practices
Written by attorneys · grounded in primary & secondary sources — see below
A benchmark for determining whether a secured party's disposition of collateral is commercially reasonable. The standard is satisfied when the disposition follows the ordinary practices of dealers trading in property of that kind.
Granite Bank repossessed high-end cranes from Titan Builders after default. The bank listed the cranes on EquipNet, a national heavy-equipment exchange that posts live index prices by category. Seasonal conditions depressed the indices, yet the bank accepted the prevailing market bids within four days. Titan's guarantor later challenged the sale, but the method aligned with how dealers ordinarily trade comparable equipment on that platform.
Bruce held a security interest in Cauthen's minority partnership interest. After default, Bruce arranged a private sale of that interest under terms that matched how reputable dealers transfer similar minority stakes in closely held entities. Cauthen later contested the disposition, but the sale followed the prevailing practices among dealers handling partnership interests of that type.
Select any source to read its text and confirm it supports the definition.
A disposition satisfies the standard when it follows the ordinary practices of dealers in the relevant type of property. Courts examine whether the method, timing, and terms match those used by reputable participants in that market. Conformity with those practices supplies an independent safe harbor even if a higher price might have been obtained by another route.
Supporting sources
No. The statute expressly states that a better price obtainable at a different time or by a different method does not by itself render the disposition commercially unreasonable. The inquiry focuses on whether the chosen method tracked dealer norms rather than on hindsight maximization of proceeds.
Supporting sources
Evidence includes use of established trading platforms or dealer networks that routinely handle the collateral type, acceptance of prices consistent with recent completed transactions in that market, and adherence to customary timing and notification procedures. Courts credit testimony or industry materials describing how responsible dealers conduct comparable sales.
Supporting sources