“At Its Sole Discretion” Outside Its Normal Habitat

I’ve written plenty about at its sole discretion over the years. The full discussion is at MSCD 3.168–96, but there’s also this 2011 article about a relevant California court opinion.

Well, today I encountered the following in a contract:

If the Company in its sole discretion agrees to such change, the Company shall …

Previously I’ve written about at its sole discretion only in the context of language of discretion (Acme may at its sole discretion …). Today’s example isn’t language of discretion. What gives?

The phrase at its sole discretion (and variants) could conceivably be used whenever a contract party makes a decision. That happens in language of discretion, but it also occurs in conditional clauses (as in today’s example), regardless of the verb: If X at its sole discretion buys/pledges/fires/licenses … .

It can also occur in a relative clause (emphasis added):

The purchase price of Shares acquired pursuant to the Award of Restricted Stock shall be paid either: (i) … ; (ii) … ; or (iii) in any other form of legal consideration acceptable to the Committee in its sole discretion and in compliance with applicable law.

But in such instances of at its sole discretion outside of language of discretion, I suggest that a form of shorthand is in use, as an alternative to which X may [verb] at its sole discretion. So whatever the context of at its sole discretion, the dynamic is basically the same.

And by the way, my advice remains the same: Don’t use at its sole discretion, whatever the context. Yes, courts have held that it has legal effect, but if you’re looking to address a given issue, you can do so more clearly than by using at its sole discretion. See MSCD and my 2011 article for more details.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.