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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.

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