Barclays v Unicredit

A good outing for the Civil Division of the Court of Appeal (Queen's Bench Division) which raises the question of what is “commercially reasonable” in the context of determinations made by parties to financial instruments. Certain guarantees issued by Barclays granted Unicredit optional termination rights some of which required Barclays’ prior consent “to be determined by [Barclays] in a commercially reasonable manner.”

The trial judge held in broad terms that Barclays was entitled to take primary account of its own interests in determining whether to consent to termination. It had a reasonable expectation of 5 years' worth of premiums, and as it had sought the PV of those fees as a price for termination, it had acted commercially reasonably.

Cited AP Picture Houses v Wednesbury Corporation [1947] 1 KB 223.