There is often debate over the phrases “reasonable endeavours”, “best endeavours” and to muddy the waters “all reasonable endeavours”; in particular, which one to use. Such clauses describe the effect a party is required to put into achieving an objective. They are often seen as beneficial because they mean that even if a party fails to achieve the desired objective, they will not be in breach of contract, provided that they can establish they have exercised the requisite level of “endeavours”.
Case law provides guidance in respect of these terms and offers insight into which is preferable when incorporating such expressions into a contract.
- Rhodia International Holdings v Huntsman International - An obligation to take one reasonable course of action.
- Yewbelle v London Green - An obligation to go on exercising endeavours until the point when all reasonable endeavours are exhausted and you would simply be repeating yourself to pursue the same options again. This does not involve sacrificing your own commercial interests.
“Reasonable endeavours” is generally accepted as being less onerous than “best endeavours”. A party who is required to use “reasonable endeavours” will probably not have to sacrifice its own commercial interests. Nevertheless, it will still be necessary to put in a significant amount of effort in an attempt to achieve the desired objective.
- IBM United Kingdom Limited v Rockware Glass Limited  FSR 335 - A party should take steps which a prudent, determined and reasonable obligee (i.e. the beneficiary of the obligation), acting in its own interests and desiring to achieve that result, would take.
- Sheffield District Railway Company v Great Central Railway Company - An obligation to leave no stone unturned, within the bounds of reason.
- Terrell v Mabie Todd & Co - An obligation to do what can reasonably be done in the circumstances, short of acting in a way which would ruin the company.
- Jet2.com v Blackpool Airport – an obligation on the airport to do all it reasonably could to enable Jet2’s business to succeed and grow, even if that caused the airport to suffer some degree of financial loss.
A best endeavours obligation is the most onerous obligation on a contracting party.
All Reasonable Endeavours
Parties may be tempted to agree an “all reasonable endeavours” clause in an attempt to meet half way between the two obligations however this type of term is far from clear.
- Rhodia v Huntsman - The court stated that an obligation to use “all reasonable endeavours” equates to an obligation to use “best endeavours”, suggesting that “all reasonable endeavours” may not be a suitable compromise for a party seeking to avoid a “best endeavours” obligation.
- CPC Group v Qatari - “all reasonable endeavours” is not equivalent to a best endeavours clause and does not always require the performing party to sacrifice its own commercial interests.
Practical Steps to consider
From the above, it can be seen that there is a degree of uncertainty as to what an endeavours clause may actually require in any given case, and these uncertainties are best dealt with expressly in the contract. Examples could include:
- What steps the party complying must take
- The end date by which the desired objective is achieved
- The extent to which the party complying should incur any expenditure
- The extent to which a party is entitled to protect its own interests, is required to act in the interests of the other party, or base its actions on its own particular circumstances.