This chapter discusses the question, To what degree is the school board limited by the requirement that it not be arbitrary or capricious in deciding not to renew a probationary teacher? When teachers have been notified that their employment contracts will not be renewed, they are responsible for initiating a review of the decision. If the school has a procedure for internal review, the employee must request this review before seeking judicial review. Cases are cited that show that the courts have found a nonrenewal "arbitrary and capricious" if it is made in bad faith, is based on the teacher's exercise of First Amendment or other constitutionally protected rights, is unrelated to the educational process or to a reasonable educational objective, is justified by reasons that are wholly unsupported in fact, or is found to be an abuse of discretion. The states' statutes (sometimes board policy) establish the school board's basis for teacher renewal. To define the issue, both cases in which the board decision was found to be arbitrary and cases in which the claim was rejected are reviewed. When the school board has acted in good faith for reasons it thinks probably will improve the instructional programs--which includes not renewing an "average" teacher in order to look for a better teacher--its decision will generally stand. (MLF)