Official Comment 4 to Article 3, 3-103
4. This Article now uses the broadened definition of good faith in revised Article 1. The definition requires not only honesty in fact but also “observance of reasonable commercial standards of fair dealing.” Although fair dealing is a broad term that must be defined in context, it is clear that it is concerned with fairness of conduct rather than the care with which an act is performed. Failure to exercise ordinary care in conducting a transaction is an entirely different concept than failure to deal fairly in conducting the transaction. Both fair dealing and ordinary care, which is defined in Section 3-103(a)(7), are to be judged in the light of reasonable commercial standards, but those standards in each case are directed to different aspects of commercial conduct.
Copyright by ALI and NCCUSL. Reproduced with the permission of the Permanent Editorial Board for the UCC. All rights reserved.