United States National Bank Of Oregon V. Boge

This civil case involves a dispute between a bank and its borrower. We decide three questions: (1) Does the duty of good faith imposed by Article 9 of the Uniform Commercial Code (UCC), ORS chapter 79, displace the common law duty of good faith?  (2) What is the standard of good faith that Article 9 of the UCC requires?  (3) Was there sufficient evidence to support the verdict of the jury, which found a breach of the duty of good faith?  We hold: (1) The duty of good faith imposed by Article 9 of the UCC displaces the common law duty of good faith. (2) With an exception not applicable in this case, Article 9 of the UCC requires only honesty in fact in the conduct or transaction concerned; that standard does not encompass commercial reasonableness or the broader concept of good faith under the common law. (3) There was sufficient evidence to support the jury's verdict on the claim of breach of the duty of good faith on one of the two theories presented, although the trial court's erroneous instruction on good faith requires a reversal and remand.