Exercise Of Bank Discretions In Banking Documents – Generally No Free Reign, Even With Absolute Discretion (Recent Developments)

Banks usually retain certain contractual discretions in banking documents. However, they are generally not unfettered, even with absolute discretion. Banks would generally still have to act in good faith and not arbitrarily, capriciously or irrationally.

Introduction

We update our previous article on this topic following the latest Singapore High Court case of Maybank Singapore Ltd v Synergy Global Resources Pte Ltd [2023] SGHC 258 (Synergy).

Banks usually retain certain contractual discretions in banking documents to protect their position over certain matters and mitigate the risk of commercial uncertainties arising over the term of the contract. These include a termination discretion (eg recalling facilities on demand), a discretion to vary another party's contractual performance (eg varying interest rates payable), and a determination discretion (eg the valuation of assets). It can be either an "absolute or sole" discretion, or a "reasonable" discretion.