Fettering the fiduciary discretion by agreement: Breach of duty or commercial reality?

The rule that a fiduciary may not fetter their discretion by agreement to act in a particular manner in the future is an important aspect of the fiduciary relationship. It traditionally found expression where trustees purported to grant options over trust property, but may now be of greater importance where corporate trustees purport to agree to exercise their fiduciary powers in a pre-determined manner. Despite its continued importance, the rule has received limited attention from the courts in recent years. Accordingly, this article explores the rule's provenance and its apparent content. The authors submit that while the rule should be qualified in certain circumstances, particularly in order to preserve a fiduciary's legitimate freedom of contract in complex commercial arrangements, the rule's importance implies that it must continue to play a role in a commercial fiduciary's dealings with third parties and not be rendered otiose by such commercial considerations.