Good faith & contractual discretion
New Balance and Fellaini … have you signed on the dotted line?
22 May 2018 - Megan Betts
In Rosalina v New Balance the court found that, having considered the full run of communications, the parties only intended to be bound when all parties had signed. As they had not, there was no binding agreement. An attempt to rely on an open-end duty to negotiate in good faith was void for uncertainty. Under a › Read More
Breach of good faith obligation in healthcare services agreement
26 April 2018 - Jin Ooi
In Health & Case Management Ltd v The Physiotherapy Network, the court held there was no contractual obligation on HCML to make a certain number of referrals. However, HCML had breached its good faith obligation by using TPN’s data to set up a rival network. Below I have picked out the court’s findings on the provisions in › Read More
Fetter not risk it: avoiding penalties and curtailing contractual rights
29 March 2018 - 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
Keeping the (good) faith: duty of good faith implied into an oral joint venture
22 March 2018 - Sophie Nettleton
The High Court (Leggatt LJ) has implied a duty of good faith into an oral joint venture, which it has classified as a “relational contract”. Building upon his use of the term in Yam Seng, Leggatt LJ defined a “relational contract” as one where “the parties are committed to collaborating with each other… in ways › Read More
Contractual right or discretion? How to tell the difference and why it matters.
05 December 2017 - 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
Do you have absolute contractual rights or a contractual discretion with Braganza limits?
06 September 2017 - 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
Discretion: you actually own it and you have to exercise it properly
21 June 2017 - 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
Being discrete: when to worry about contractual discretion
18 October 2016 - 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
Good faith in English contract law – a fuss about nothing?
07 October 2016 - 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