Searching for Commercial Reasonableness Under the Revised Article 9

Under U.C.C. Article 9, a secured party selling repossessed collateral must conduct a commercially reasonable sale. Under the old Article 9, courts and commentators debated the question of whether the foreclosure sale process and its procedural regularity should measure the sale\u27s commercial reasonableness or whether instead the main focus of inquiry should be the reasonableness of the proceeds produced by the sale. This question spawned conflicting and non-uniform judicial approaches, most simply described as the procedures test versus proceeds test. In 2001 Article 9 was revised. The revisions included changes that addressed, but did not explicitly resolve, the question of whether courts should use a procedures test or a proceeds test to assess a sale\u27s commercial reasonableness. The lack of clarity threatens to extend the old debate of procedures versus proceeds without end. To quash this threat, the Article makes three related arguments. First, it argues that revised Article 9 requires that a sale\u27s commercial reasonableness be measured primarily by the sale\u27s procedures rather than the amount of the proceeds; that a low price alone cannot render a procedurally regular sale unreasonable; and that price not is a term of commercial reasonableness that the secured party must prove using secondary source evidence of value and fair price. The Article also argues, however, that under revised Article 9\u27s provisions, price\u27s role in assessing commercial reasonableness is ambiguous. Given this ambiguity, price\u27s role can and should be construed to retain an important but limited function in assessing the sale\u27s commercial reasonableness. Second, the Article argues that with revised Article 9\u27s adoption of the procedures test, the test\u27s historical shortcomings take on a heightened importance. For revised Article 9\u27s commercial reasonableness standard cum procedures test to have normative force, these shortcomings must be analyzed and addressed. Third, the Article makes various recommendations to address these shortcomings