D – Discretion
28/7/17
BHL v LEUMI ABL LTD [2017] EWHC 1871 (QB)
A clause in a receivables financing agreement entitling a bank to fees of "up to 15%" of receivables recovered was not a penalty but required the bank to exercise its discretion in a way that was not arbitrary, capricious or irrational (applying Braganza v BP Shipping, 2015). The bank’s decision to charge 15% without any attempt to calculate the likely costs of recovery, and without considering charging less than the maximum, was a failure to exercise its discretion properly. The court allowed a reasonable estimate of the bank's actual collection expenses and required it to refund the excess to the company.
20/3/14
BARCLAYS BANK PLC v UNICREDIT BANK AG [2014] EWCA Civ 302
A bank's refusal to consent to the early termination of guarantees it had given in respect of loan portfolios had been exercised in "commercially reasonable" manner in the terms of the guarantees because early termination would have deprived the bank of significant revenue over the remaining term of the transaction. The bank had been entitled to take account of its own interest in preference to that of the counterparty to the guarantees.
19/7/13
CHARLES STANLEY & CO LTD v ADAMS [2013] 2137 (QB)
There is no intrinsic bar to prevent contracting parties from giving a power to one of them to determine something which affects their contractual rights. So a provision in a contract for a broker to be liable for loss incurred by the claimant in connection with a client managed by the broker was enforceable although the contract gave the claimant the right to determine the broker’s liability.
15/3/13
MID ESSEX HOSPITAL SERVICES NHS TRUST v COMPASS GROUP UK & IRELAND LTD [2013] EWCA Civ 200
There was no implied term in a catering and cleaning service contract that in deciding whether to impose service failure points leading to payment deductions, the Trust would not exercise its discretion arbitrarily, capriciously or irrationally. The contract contained a mechanism to determine when service failure points became due, including a dispute resolution clause. Once the points were due, the Trust had an unfettered discretion whether or not to award them.
21/11/12
YILPORT KONTEYNER TERMIANLI VE LIMAN ISLETEMELERI AS v BUXCLIFF KG [2012] EWHC 3289 (Comm)
Although a party to a contract had a discretion to fix rates and charges, there was an implied term that the charges had to be reasonable. But since services had been provided in an emergency, the claimant was not required to provide detailed proof of its expenditure.
15/3/12
EUROPTION STRATEGIC FUND LTD v SKANDINAVISKA ENSKILDA BANKEN AB [2012] EWHC 584 (Comm)
Where a clearing broker had a discretion to close–out transactions if a client failed to provide sufficient cash margin for option transactions, the broker’s duty was limited to exercising its discretion rationally. The broker owed no duty of care in tort and when closing-out transactions the broker was not providing a service within the meaning of the Supply of Goods & Services Act 1982 so there was no implied term of skill and care. Nor was it necessary to imply a term applying common law principles.
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