What kind of ‘endeavours’ should one agree to?
Obligations set out in a contract are normally absolute and failure to satisfy an obligation will be a breach of contract. The parties to a contract may therefore want to qualify an obligation by only agreeing to ‘try’ to achieve it. This is where ‘endeavours’ clauses are commonly used.
As lawyers we see all sorts of these clauses and often advise our clients on whether they should accept them, but unfortunately we cannot say with certainty what the terms ‘reasonable’, ‘all reasonable’ and ‘best’ endeavours actually mean. When looking at them, the courts will look at the circumstances. They will apply different meanings of ‘endeavours’ depending on the background and the obligations to be given under the contract.
Nevertheless, it is sensible to be careful when agreeing this type of clause as the parties may believe that the term used means something quite different to its true meaning. We will therefore look at each term in turn.
Reasonable endeavours is the least onerous obligation. If there is more than one course of action, the party can normally choose which one to take. The party may be obliged to incur some cost or commence litigation when fulfilling this obligation, but can have regard to its own commercial interests including the cost, their reputation and the likely chance of success when deciding which route to take.
Best endeavours is the most onerous obligation. Although acting with best endeavours is not an absolute obligation to do something and does not require a party to incur costs which will result in financial ruin or to commence litigation which is bound to fail, it may involve taking steps which are commercially unreasonable and could involve significant costs.
All reasonable endeavours is generally less onerous than best endeavours but more onerous than reasonable endeavours.
The meaning given to an endeavours clause will be very case specific and therefore may vary from contract to contract. If you require advice on endeavours clauses, please contact us on 01242 514000.
Associate Sophie Martyn advises directors, partnerships, SMEs, sole traders and national companies on the full range of corporate and commercial work. She has extensive experience, including mergers and acquisitions, company reorganisations, banking, venture capital and joint ventures, and is noted for her “calm and robust position under pressure”.We're here to help