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Contractual discretion

Fetter not risk it: avoiding penalties and curtailing contractual rights

Jason Rix

Last week, Richard Hooley gave one of his regular talks on recent developments in banking and finance law. Below I have set out a couple of knotty contractual issues I noted down: “Clever” (or careful) drafting may stop a clause being a penalty (Holyoake v Candy). A requirement to pay a redemption amount on voluntary early Read More

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Contractual right or discretion? How to tell the difference and why it matters.

Jason Rix

Richard Hooley gave Allen & Overy a talk about “contractual discretions” versus contractual rights. It is a topic we have covered a number of times on this blog and, one which still the courts are grappling with. Richard covered a lot of ground; below I highlight a few practical points he drew out. Contractual discretion has Read More

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Do you have absolute contractual rights or a contractual discretion with Braganza limits?

Samantha Holland

In Shurbanova v Forex Capital Markets the High Court found that a clause permitting a broker discretion how to act in relation to – what the broker considered was – abusive trading strategies by a client were absolute contractual rights and therefore not subject to a Braganza duty to exercise its discretion rationally. Forex Capital Read More

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Discretion: you actually own it and you have to exercise it properly

Jason Rix

In Watson v Watchfinder.co.uk, a refusal to consent to a share option entailed an improper exercise of a contractual discretion. Watchfinder buys and sells luxury pre-owned watches. It granted an option in its shares to Watson and others who were directors of a company that was providing services to Watchfinder. The relevant provision stated “The Read More

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Being discrete: when to worry about contractual discretion

Jason Rix

Last week the Royal Swedish Academy of Sciences Nobel Prize for Economics went to Hart and Homstrom for their contribution to contract theory. Hart has considered so-called “incomplete contracts”.  These arise because it is not possible to specify every eventuality. This is where contractual discretion often comes in. We tend to use the term “discretion” quite broadly in Read More

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Good faith in English contract law – a fuss about nothing?

Jason Rix

Some English lawyers seem to distrust the concept of good faith insofar as it relates to the performance of obligations under commercial contracts. If this is the case, the good news is that it is implied infrequently and when it is implied, the requirements tend not to be that onerous. The bad news is that Read More

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