Contractual Discretion 2026 (Paper)

Materials comprised of a Paper and PowerPoint Handout. 

Event Date:

2 September 2026

Presenters:

Tom Ashley Barrister, Eldon Chambers

Synopsis:

Many contracts confer a discretion or power on one or more contracting parties, the exercise of which may significantly affect the rights and obligations of others. Where such discretions or powers exist, questions can arise as to constraints on their exercise; parties to contractual disputes frequently raise these issues in litigation.

The Courts have not yet clearly articulated the principles governing the exercise of contractual discretions and powers. This paper examines leading New Zealand and UK decisions and attempts to identify a set of organising principles. It considers when arguments based on improper exercise may properly be advanced in litigation, as well as the limits of such arguments. The paper addresses practical drafting considerations and strategies to reduce uncertainty and mitigate the risk of disputes arising from the exercise of discretions or powers.

These Materials will help you:

Analyse how courts have approached questions about the proper exercise of contractual discretions and powers.
Identify the circumstances in which an argument based on the improper exercise of a contractual discretion or power may be appropriately (and successfully) advanced.
Implement practical drafting strategies to reduce uncertainty and minimise the risk of disputes arising from the exercise of contractual discretions or powers.

Intended Audience:

This paper will be relevant to practitioners involved in drafting, advising on, or litigating contracts of all types, including commercial agreements, sale of goods, property transactions, and leases. The principles may also be relevant in the employment context, subject to additional considerations.