Legal Seminar, Chicago, IL

Commercially Reasonable Security Procedure

 Courts should consider several factors  The wishes of the customer expressed to the bank  The circumstances of the customer known to the bank, including:  Customer’s size;  Type of customer; and  Frequency of payment orders normally issued by the customer to the bank.  Multifactor is the key  Cannot rely on one kind of security mechanism  Commercial reasonableness depends on multiple steps What is “commercially reasonable”