Q&As

What are Braganza duties in commercial contracts?

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Produced in partnership with Jonathan Edwards of Radcliffe Chambers
Published on LexisPSL on 06/10/2017

The following Commercial Q&A produced in partnership with Jonathan Edwards of Radcliffe Chambers provides comprehensive and up to date legal information covering:

  • What are Braganza duties in commercial contracts?
  • What Braganza itself was about
  • The decision in Braganza
  • Potential wider relevance
  • Shurbanova and BHL

What are Braganza duties in commercial contracts?

This Q&A discusses the duty of rationality that applies where a contract provides that a matter is to be determined by a party, as considered in Braganza v BP Shipping Ltd.

What Braganza itself was about

The claimant’s husband worked on a ship in the course of his employment, pursuant to a contract which had a clause conferring a benefit on the claimant if he died in service. However, that benefit would not be due if, ‘in the opinion of’ the employer or its insurers, the death was suicide. The claimant’s husband disappeared while working onboard, and was presumed drowned. The employer investigated and the manager appointed to decide the employer’s position on the issue decided the death was suicide. The claimant sought to challenge the employer’s entitlement to form that opinion and rely on it for the purposes of the contract. It was common ground that the employer’s opinion had to meet some threshold of reasonableness—at least the low threshold that the opinion not be so unreasonable that no reasonable person could have formed it. Broadly, the issue for the Supreme Court to decide was the extent, if any, that the requirement of reasonableness went further than that.

The decision in Braganza

The case was decided by a margin of three to two. However, although Lord Neuberger and Lord Wilson dissented

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