INTRODUCTION
It is common for a contract to confer a discretion upon one party. Sometimes the limits of that discretion will be explicitly stated in the agreement, but often the contract is silent. It can then be difficult to ascertain what, if any, controls upon the exercise of discretion exist. We suggest that any restrictions need to be found through the normal techniques of interpretation and implication, and that these usually have the effect that contractual powers must be exercised for a proper purpose. The application of these techniques will sometimes indicate that the parties intended that a discretion should be unlimited or that extensive restrictions should apply. Two mechanisms to control contractual discretions which have achieved prominence recently are, first, incorporating public law notions of ‘Wednesbury reasonableness’, and, secondly, relying upon a general doctrine of good faith …
€ (Westlaw)
Paul S Davies and Philip Sales, ‘Controlling contract discretions: Wednesbury reasonableness, good faith and proper purposes’ (2024) 140 Law Quarterly Review (Jan) 106-129.
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