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CONTRACTUAL POWERS: How to reach a reasonable opinion

01 May 2015  

Charles Wynn-Evans examines a recent Supreme Court decision considering a challenge to an employer’s decision under provisions in an employment contract providing for the employer to determine a matter in its opinion

Employment lawyers will be familiar with the limitations that the common law places on employers’ exercise of contractual discretions in the employment relationship, particularly when making discretionary bonus awards. A well-known line of cases has implied a term into the contract of employment to the effect that an employer must not determine a contractual but discretionary bonus award irrationally, perversely, arbitrarily or otherwise than in good faith (Horkulak v Cantor Fitzgerald International [2004], Clark v Nomura International plc [2000] and Clark v BET plc [1997]).

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  • Case(s) Referenced: