Lloyd's Maritime and Commercial Law Quarterly
AGAINST JUDICIAL REVIEW OF DISCRETIONARY CONTRACTUAL POWERS
Lymington Marina v. Macnamara
Jonathan Morgan *
Lymington Marina v. Macnamara attempts to draw a clear line between administrative law (in particular,
“Wednesbury unreasonableness”) and the review of discretionary powers in contracts. It is argued here that the case is a welcome development, but does not go far enough. In commercial cases at least, the courts should give up the jurisdiction to review contractual discretions altogether.
Introduction
Over the past few years, English courts have increasingly intervened to review the exercise of discretionary powers contained within contracts. A growing body of cases has seen the implication of terms stating that such discretions may not be exercised “wholly unreasonably”—in terms strongly reminiscent of administrative law, and in particular of “Wednesbury
unreasonableness”.1
Sir Jack Beatson’s leading study of 1995 already looks rather dated in its conclusion that: “Contract law, as opposed to the content of particular contracts or classes of contracts, has not been influenced either by public law principles or by the rules of statutory regulatory regimes.”2
Right across the law of contract, seemingly untrammelled discretions have been limited by implied terms, applying to parties as diverse as mortgage lenders,3
reinsurers4
and employers.5
This developing jurisdiction has been well analysed by Daintith.6
However, a jarring counter-example is to be found in the recent Court of Appeal decision in Lymington Marina Ltd
v. Macnamara
.7
Overruling the judge at first instance, it was held that a contractual licensor considering whether in its discretion to approve a sub-licence was under no duty to act in a “Wednesbury
reasonable” fashion. Reliance upon such administrative law doctrines was said to be unnecessary, undesirable and inappropriate.
At first sight, this appears to be a notable return to the “isolationist” contract law, standing apart from public law principles, as Beatson had previously described it.
* Fellow of Christ’s College, Cambridge.
1. See Associated Provincial Picture Houses Ltd
v. Wednesbury Corp
[1948] 1 KB 223.
2. “Public Law Influences in Contract Law”, ch 10 of J Beatson and D Freidmann (eds), Good Faith and Fault in Contract Law
(Oxford, 1995), 288.
3. Paragon Finance
v. Nash
[2001] EWCA 1466; [2002] 1 WLR 685.
4. Gan Insurance Co
v. Tai Ping Insurance Co
[2001] 2 All ER (Comm) 299.
5. Horkulak
v. Cantor Fitzgerald International
[2004] EWCA Civ 1287; [2005] ICR 402.
6. T Daintith “Contractual Discretion and AdministrativeDiscretion: A Unified Analysis” (2005) 68 MLR 554.
7. [2007] EWCA Civ 151.
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