“All reasonable endeavours” clauses

A contractual obligation to use “best”, “reasonable” or “all reasonable” endeavours to achieve something is not regarded as too uncertain to be enforceable, even where that is to enter into a further agreement. This is subject, however, to the object of the endeavours being capable of being ascertained with sufficient certainty. The meaning of such an obligation will be determined by the contract as a whole and there is limited scope to extrapolate from other cases.

Generally, "best endeavours" is the most onerous of these provisions with "reasonable endeavours" being the least burdensome and "all reasonable endeavours" coming somewhere between the two. However, in Jet2.com v Blackpool Airport, the trial Judge noted that it was "common ground that there is no difference between best and all reasonable endeavours" and neither he nor the Court of Appeal questioned this interpretation. The recent decision in Brooke Homes (Bicester) v Portfolio Property Partners, suggests a possible difference between these terms, albeit fairly limited.

“All reasonable endeavours”

In Brooke Homes, the parties entered into three agreements relating to a proposed property development. There was no binding contract for the sale of land, but there was a binding set of Heads of Terms that included an obligation to use “all reasonable endeavours” to enter into a final Agreement, including the entry into a conditional agreement for the sale of land. The Heads of Terms also included an express duty of good faith between the parties and an agreement to structure the final Agreement to achieve the desired commercial and financial outcome for both parties for their mutual benefit.

In determining the scope of the parties’ obligations, the judge started by setting out the three types of endeavours clauses commonly encountered:

• “reasonable endeavours”, which might mean if one reasonable path is taken then the obligation is discharged;
• “all reasonable endeavours” means requiring all reasonable paths or actions to be exhausted, but is unlikely to require the party to sacrifice its own commercial interests;
• “best endeavours” is more likely to require the sacrifice of some commercial interests on the part of the performing party.

The question of what is a reasonable path depends upon “whether it would have had a significant or substantial chance of achieving the desired result”.

The judge noted that these categorisations do not tell the whole story, since the precise scope of the obligation will depend on the context in which that wording arises. So “even with "all reasonable endeavour clauses" some subordination of commercial interests may be required.”

The judge found that the clause in this case did not go so far as to require one or other party to ignore their own commercial interests, but it did require them to have regard to the other party’s commercial interests, their mutual benefit, and also the overall desired outcome. It also meant that if one party requested a reasonable contractual variation which would benefit them and would be of no real detriment to the other party, then the parties were expecting each other to agree to that.

What this means

• Only use “endeavours” clauses where there is no other way of phrasing the obligation, as they are always inherently uncertain in scope. Though no argument was raised in Brooke Homes that the obligation was void as an agreement to agree, there is a risk of such an interpretation.
• Be aware of the difference between “reasonable endeavours”, “all reasonable endeavours” and “best endeavours”, but remember that the contractual context will also be highly relevant as to what precisely each party is expected to do.
• It is likely to be rare that a party will be obliged to act completely against its own commercial interests in order to fulfil any “endeavours” obligation.
• Be as specific as possible as to the minimum level of action required by the party obliged to use endeavours, to bring as much certainty as possible to the clause. Ask yourself whether certain actions would fall within or outside the scope of the obligation and consider whether these should be express obligations.
• Consider the duration of the “endeavours” obligation. Here the parties had failed to make that express, but the judge found that it was the “Exclusivity Period” set out in one of the other agreements.