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30 August 2021

The Limits to Contractual Discretion

Ong Ken Wei

Published on e-First 30 August 2021

In modern contracts, it has become increasingly common to find terms purporting to confer discretionary powers upon one of the parties. In such situations, should the exercise of those powers be unfettered? If not, what ought to be the limits? This article argues that limits ought to be imposed on the exercise of contractual discretions. In particular, it is proposed that the limits to contractual discretions can, should, and have been (rightly) discerned by reference to the power-holder’s decision-making process, and that contract law may draw lessons from administrative law in that regard.