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Absolute discretion: Difference between revisions
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An “absolute” [[discretion]] is to be contrasted in theory, if not really in practice, with one that is bounded by an overriding obligation to act “in [[good faith]], and in a [[commercially reasonable manner]]”. But, as we have sounded off [[Commercial imperative|elsewhere]], any merchant that acts in [[bad faith|''bad'' faith]], or in a [[Commercially reasonable|commercially ''un''reasonable]] manner, ''even if his contract permits it'', should not expect to have clients for very long. | An “absolute” [[discretion]] is to be contrasted in theory, if not really in practice, with one that is bounded by an overriding obligation to act “in [[good faith]], and in a [[commercially reasonable manner]]”. But, as we have sounded off [[Commercial imperative|elsewhere]], any merchant that acts in [[bad faith|''bad'' faith]], or in a [[Commercially reasonable|commercially ''un''reasonable]] manner, ''even if his contract permits it'', should not expect to have clients for very long. | ||
You will hear it [[Special pleading|specially plead]] that, for all its superficial appeal, a component of “reasonableness” in a discretion invites argument about its scope, precisely at the point where you might not want any. When, for example, you are exercising a reasonable discretion to demand more [[margin]], or something like that. But this argument has more mouth than trouser: | |||
A discretion, by its nature, is a self-help remedy. Its exercise requires no permission; no appeal to the court, no arbitral award. One may just do it, at — well — at one’s ''discretion''. Forensic examination of the ''propriety'' of the exercise of a reasonable discretion necessarily come after the fact. Yes; your counterparty might challenge it in court, but it is only likely to do that ''if you were being manifestly unreasonable'': the standard of reasonableness, as we have seen,<ref>{{casenote|Barclays|Unicredit}}</ref> hard for a third party to displace. You can control for this later eventuality by ''not'' being manifestly unreasonable. But for the time being, you can just carry on.<ref>Your client might, of course, seek an interim injunction to stop you exercising your reasonable discretion. This happens literally ''all the time''.</ref> | |||
If you are staring into the abyss — if your genuinely believe your client is corkscrewing into the side of a hill — and you hesitate to exercise a discretion because it might not turn out to have been reasonable, the problem is not with your legal documents. It is with you. Your coat is on the hook. | |||
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