MH Dispute Resolution

Thursday 9 November 2017

Contractual discretion – not an absolute

It is common in commercial contracts for one party to be given the power to make a determination eg. as to whether certain conditions have been sufficiently met as a precondition to some contractual entitlement due to the other party.  Even though the relevant contractual clause may not impose express limits on the exercise of the discretion, the recent High Court case of Watson et al v Limited [2017] EWHC 1275 serves as a reminder that the party with the power to make the determination should not fall into the trap of assuming that they have absolute discretion in the exercise of this power.