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Constantly endeavouring…but to what end, exactly?

The terms “best endeavours”, “all reasonable endeavours” and “reasonable endeavours” frequently appear in contracts. While there may be uncertainty between the endeavours, contract drafting would be a great deal harder without them.


Distinguishing the types of endeavours:

“Best endeavours”
Satisfying a "best endeavours" obligation does not require a party to take steps that would result in bankruptcy or liquidation. That said, it can still cause you to make a loss on the job. A party should exhaust all reasonable courses which could be taken. A "best endeavours" obligation can require the party under the obligation to risk success or failure where there is a reasonable prospect of commercial success.


“All reasonable endeavours”
An "all reasonable endeavours" obligation does not always require sacrificing commercial interests; commercial context dependent.


“Reasonable endeavours”
A "reasonable endeavours" obligation does not require a party to disadvantage itself unless the contract specifies that certain steps have to be taken in performance of the obligation. "Reasonable endeavours" applies an objective standard of what a competent person might do in the same circumstances. In Rhodia International Holdings v Huntsman International [2007] the obligation to use “reasonable endeavours” only required the obligor to take one reasonable course of action and not all of them, in contrast to an obligation to use “all reasonable endeavours.”


Advice
It is advisable to make any pre-condition an absolute obligation by using the words “shall” or “must”. If the parties to a contract containing endeavours clauses do not make the objective of the clause clear, they could be deemed unenforceable for lack of certainty because there is no reasonable way to measure a party’s attempt to fulfil their obligation.


The key to negotiating contract successfully is to understand what you are asking for, rather than blindly to refuse or require certain wording. As with most commercial situations, the interpretation of the words depends on the circumstances so you should adapt your approach accordingly and not have an unmoveable policy on endeavours.


If you have any questions please do not hesitate to contact Katie Pickering, on 01242 248215 or katie.pickering@bpe.co.uk.

 

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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