High Court clarifies law on contractual discretion and penalty clauses

14 Aug 2018

In the recent decision of Ricardo Leiman v Noble Resources [2018] SGHC 166, the High Court held that an exercise of a contractual discretion may be invalidated if it was arbitrary, capricious or in bad faith. The High Court also held that where a clause is challenged for being a penalty clause, the Court will first determine whether the clause is a straightforward damages clause as different tests would apply.

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