| From: | Tobias Barkley <T.Barkley@latrobe.edu.au> |
| To: | Gerard Sadlier <gerard.sadlier@gmail.com> |
| CC: | ODG <obligations@uwo.ca> |
| Date: | 09/12/2013 23:43:14 UTC |
| Subject: | RE: Can a Discretionary Benefit Constitute Consideration? |
Dear Gerald
Perhaps a useful comparison is where one party’s contractual benefits are subject to a unilateral, unconstrained power to vary
the contract terms as discussed by Justice Stephen Kós in ‘Constraints on the Exercise of Contractual Powers’ (2011) 42 Victoria University Wellington Law Review 17. Although I acknowledge there is quite a distinction between a discretion to vary benefits
and a discretion to give benefits at all.
Regards
Tobias Barkley
Associate Lecturer | La Trobe Law School
P + 61 3 5444 7348
From:
Jason Neyers [mailto:jneyers@uwo.ca]
Sent: Saturday, 7 December 2013 2:29 AM
To: Gerard Sadlier
Cc: ODG
Subject: Re: Can a Discretionary Benefit Constitute Consideration?
Dear Gerald:
There are also some cases that suggest that a discretionary benefit can be certain enough to enforce (and hence one would think that it could count as a consideration) if the discretion is sufficiently limited or not unbridled so that the promise is not the
illusory (if I feel like it) type, see eg:
Greenberg v. Meffert. (1985), 50 O.R. (2d) 755 (C.A.).
ROBINS J.A., interpreting a contract whereby the payment of a commission to a terminated real estate agent was "at the sole discretion" of the company, held as follows. "In my opinion, the company's discretion
in this matter is not unbridled, firstly, because the nature of this contract and the subject-matter of the discretion are such that the company's decision should be construed as being controlled by standards and secondly, because the exercise of the discretion,
whether measured by subjective or objective standards, is subject to a requirement of honesty and good faith. Provisions in agreements making payment or performance subject to 'the discretion,' 'the opinion' or 'the satisfaction' of a party to the agreement
or a third party, broadly speaking, fall into two general categories. In contracts in which the matter to be decided or approved is not readily susceptible of objective measurement--matters involving taste, sensibility, personal compatibility or judgment of
the party for whose benefit the authority was given--such provisions are more likely construed as imposing only a subjective standard. On the other hand, in contracts relating to such matters as operative fitness, structural completion, mechanical utility
or marketability, these provisions are generally construed as imposing an objective standard of reasonableness … . In any given transaction, the category into which such a provision falls will depend upon the intention of the parties as disclosed by their
contract. In the absence of explicit language or a clear indication from the tenor of the contract or the nature of the subject-matter, the tendency of the cases is to require the discretion or the dissatisfaction to be reasonable … . This construction imposes
the least hardship in that it produces a result that cannot be said to be unfair or unjust to either of the parties. Other things being equal, I think it preferable that provisions of this kind be construed as implying the less arbitrary standards of the objective
test … ."
Jason Neyers
Professor of Law
Faculty of Law
Western University
N6A 3K7
(519) 661-2111 x. 88435
On 06/12/2013 5:34 AM, Gerard Sadlier wrote: