When Did “Reasonableness” Become Controversial in Contracting?

A growing share of technology deals seem to stall for reasons that have very little to do with the product, the price or whether the parties actually want to work together. Instead, an outsized amount of time gets spent negotiating contracts that were drafted less as tools for delivering the relationship and more as exercises in transferring every conceivable risk to the other side.

Somewhere along the way, “market” started to become synonymous with maximum protection. Every obligation should be absolute. Every remedy should favor one side. Every hypothetical risk should be allocated now, preferably to someone else. And words like “reasonable,” which have been doing perfectly respectable work in contracts and the law for a very long time, suddenly became suspicious.

I spend a lot of time negotiating technology and commercial agreements, and I am increasingly unconvinced that this approach produces better contracts. It certainly produces longer negotiations.

There are provisions that should be precise. If a payment is due in thirty days, say thirty days. If data must be deleted within a particular period, identify the period. If a service level is measurable, measure it. Ambiguity for ambiguity’s sake is not thoughtful drafting, and “reasonable” should not be used as a substitute for making a decision when the parties can and should establish an objective standard.

But precision and absolutism are not the same thing.

Commercial relationships operate in the real world, where circumstances change, judgment is sometimes required, and not every future scenario can—or should—be reduced to a rigid contractual rule. In those circumstances, a reasonableness standard can be a feature rather than a drafting failure. It can create enough flexibility for the parties to operate while still imposing a meaningful obligation on the party exercising discretion.

Yet I routinely see negotiations where a commercially reasonable standard is treated as a concession that must be eliminated. A party must take all measures instead of reasonable measures. Consent may be withheld for any reason rather than not unreasonably withheld. An obligation becomes absolute even when performance depends partly on people, systems or circumstances outside the party’s control. The provision may look stronger on paper afterward, but that does not necessarily make the agreement better.

The real question should be: what does this provision need to accomplish for this particular relationship?

That requires understanding the business behind the contract. How will the service actually be delivered? Who controls the relevant risk? What can each party realistically do if something goes wrong? Which obligations genuinely require certainty, and where does the business need room to exercise judgment? What is material enough to protect against, and what are we spending time negotiating simply because someone once put it in the template?

Those questions are less satisfying than declaring a provision “market,” because they require judgment. They are also much more useful.

The goal of a commercial agreement should not be to win every sentence. It should be to create a structure in which the parties understand their obligations, the important risks are allocated thoughtfully, and the business can actually operate after everyone signs.

That last part gets lost surprisingly often.

A beautifully aggressive contract that requires operational teams to do things they cannot realistically do is not particularly protective. A provision that looks impressive in a redline but will be ignored in practice creates a different kind of risk. And an agreement that takes months longer than necessary to negotiate has a cost even if nobody puts that cost into the contract tracker.

Legal spend is part of it, but so are delayed launches, exhausted business teams, procurement bottlenecks and relationships that begin with both sides irritated by a negotiation neither believed needed to be that difficult.

None of this means companies should accept bad terms in the name of being “reasonable.” Some risks are material. Some positions deserve a hard line. Some obligations need objective deadlines, defined standards and meaningful remedies. There are also plenty of circumstances in which “reasonable” is too vague to give the business what it needs.

The point is that good contracting requires distinguishing those provisions from everything else.

Reasonableness is not anti-technology. Fairness is not anti-growth. And accepting a balanced provision does not mean a lawyer failed to negotiate aggressively enough.

Sometimes the sophisticated position is the one that recognizes that the parties are trying to build a functioning commercial relationship, not accumulate points in a redline.

That can be a competitive advantage. Companies with contracting positions that reflect how their products and services are actually delivered can negotiate more consistently, give clearer guidance to their teams and spend less time relitigating the same theoretical issues deal after deal. They can reserve negotiation capital for the provisions that actually matter.

There will always be tension in commercial contracting. Parties have different interests, different risk tolerances and different leverage. That is why we negotiate.

But leverage is a tool. It should not be the purpose of the document.

The better question is whether the contract helps the business enter into the relationship with its eyes open, its important risks addressed and a workable framework for what happens next.

If it does, a little reasonableness may be entirely reasonable.