'All Reasonable Endeavours' Assessed

In a recent decision, the High Court has provided useful insight into the types of obligations an "all reasonable endeavours" clause will impose on a distributor, and a practical guide to the steps a distributor is likely to be required to take to fulfil the requirements of such a clause. Such steps include the preparation of marketing and promotional plans, co-operation and engagement with the supplier, and the maintenance of an adequately structured and directed sales and marketing organisation.

While in this case no single failing by the distributor was held to be sufficient to constitute a breach of the clause, the Court held that a number of minor failings, when viewed together, were sufficient to be considered a breach.

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In a recent decision, the High Court has provided useful insight into the types of obligations an "all reasonable endeavours" clause will impose on a distributor, and a practical guide to the steps a distributor is likely to be required to take to fulfil the requirements of such a clause. Such steps include the preparation of marketing and promotional plans, co-operation and engagement with the supplier, and the maintenance of an adequately structured and directed sales and marketing organisation.

While in this case no single failing by the distributor was held to be sufficient to constitute a breach of the clause, the Court held that a number of minor failings, when viewed together, were sufficient to be considered a breach.

In the case of case of CEP Holdings Ltd & CEP Claddings Ltd v Steni AS, the High Court has provided a useful guide to some of the practical steps that should be expected of a reasonably competent and energetic distributor in the fulfilment of an all reasonable endeavours obligation.

The claimants in this case (CEP Holdings and CEP Claddings) are part of a group of companies which supply claddings and other building materials to construction companies. The defendant, Steni AS, is a cladding manufacturer. In 1999, the parties entered into a distribution agreement appointing the CEP group as the exclusive distributors of Steni products in the UK. This agreement required CEP Holdings to use all reasonable endeavours to promote and sell Steni's products. In 2005, Steni sent notice to CEP terminating the agreement due to certain breaches, including CEP's failure to use all reasonable endeavours to promote and sell Steni's products in the...