Judgment was given last week in Brogden v Investec Bank Plc [2014] EWHC 2785 (Comm). The decision, which concerned unsuccessful claims for bonus payments, is noteworthy because of the discussion it contains regarding the manner in which contractual discretion should be exercised.
The trial judge, Mr Justice Leggatt, observed (at para. [100]): "Both on the authorities and as a matter of principle, it seems to me that where a contract gives responsibility to one party for making an assessment or exercising a judgement on a matter which materially affects the other party's interests and about which there is ample scope for reasonable differences of view, the decision is properly regarded as a discretion which is subject to the implied constraints that it must be taken in good faith, for proper purposes and not in an arbitrary, capricious or irrational manner".
Tuesday 12 August 2014
UK: England and Wales: employment, bonuses and contractual discretion
Judgment was given last week in Brogden v Investec Bank Plc [2014] EWHC 2785 (Comm). The decision, which concerned unsuccessful claims for bonus payments, is noteworthy because of the discussion it contains regarding the manner in which contractual discretion should be exercised.
The trial judge, Mr Justice Leggatt, observed (at para. [100]): "Both on the authorities and as a matter of principle, it seems to me that where a contract gives responsibility to one party for making an assessment or exercising a judgement on a matter which materially affects the other party's interests and about which there is ample scope for reasonable differences of view, the decision is properly regarded as a discretion which is subject to the implied constraints that it must be taken in good faith, for proper purposes and not in an arbitrary, capricious or irrational manner".
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