Discretion
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Freedom. Choice. Happiness. Individuality. Optionality, unbound by considerations of what anyone else might think.
The stance one adopts by uttering the expression “I may” (or, if one is legally qualified, “I shall be entitled, acting for the avoidance of doubt in my sole and absolute discretion”.)
A simple idea that lawyers will work hard to make seem difficult.
The two-edged sword of discretion
The pitfalls of being offered unfettered discretion — yes: pitfalls — are a window into how the legal mind thinks.
Let us say a bond issuer is expecting to raise a million pounds, and wishes to make arrangements to warehouse issued securities with its own settlement agent pending remittance of funds for them by the subscriber. With all the will in the world, there can be unforeseen delays and so on.
The settlement agent is happy to act, for a suitable fee, but wants the certainty of some end point to its commitment.
The issuer presents a draft. It says:
“If I have not paid you in 10 days, at your absolute discretion you may cancel the transaction immediately by notice at any time.”
Granted, “at your absolute discretion” adds nothing to “you may”, but we know how craven and paranoid our learned friends can be, so are trying to be accommodating.
The draft comes back marked thus:
“If I have not paid you in 10 days,
at your absolute discretionyoumaymust cancel the transaction immediately by notice at any time.”
Now why would an agent prefer to be obliged, rather than simply entitled to act? we think this stems from an ancient, but irrational, fear of mis-exercising a discretion. What if my discretion is challenged? I might be found to have breached an implied duty of reasonableness, or something. Rejoining that this is not how implied terms work in contracts will hardly ingratiate yourself to your opponent, and reminding her of The Moorcock [1889] 14PD 64 may have her regard you as bumptious. “My client wants no debate about whether it should, or should not, have done what it did.”
Yet, manifestly, this leads to worse outcomes. We can picture it: an issue proceeds, there is a subscription hitch that persists a while. Before you know it, day 10 rolls around, whereupon the subscriber, having mounted whatever hurdles lay before it, has has committed to payment in full upon the morrow. Instructions are matched, cabin-doors locked, missiles armed until beloved settlement agent, who knows all of this perfectly well, comes on the line to say, “I am afraid I am obliged to terminate the arrangement. My compliance department says I have no choice. There is no discretion.”