'Best Endeavours' - To Act Against One's Own Commercial Interests?

Summary

On 2 April 2012, in Jet2.com Limited v Blackpool Airport Limited the Court of Appeal delivered its decision in response to the appeal by Blackpool Airport Limited (the "Airport") against a ruling by the High Court holding that it had breached its contract with Jet2.com Limited when it refused to accept flights scheduled by Jet2 outside the Airport's usual operating hours. The Court dismissed the appeal (with one judge dissenting) stating that the obligation to use best endeavours in the contract between the parties was capable of giving rise to a legally binding obligation and obliged the Airport to do all it reasonably could to enable Jet2's business to grow. The promotion of Jet2's business extended to keeping the Airport open to accommodate flights outside its usual operating hours as this was crucial to Jet2's business as a low cost-carrier.

Background

Jet2 and the Airport entered into a contract on 23 September 2005 to govern the operation of Jet2 flights from and to the Airport for the next 15 years. Jet2 was obliged to begin flight services between Blackpool and Belfast and to base its aircraft at Blackpool as soon as practicable, and in accordance with growing demand. Jet2's first aircraft was to be based at Blackpool from March 2006. In return, the Airport agreed to promote Jet2's services from Blackpool, as well as provide ground services and marketing support for Jet2's business.

Following the execution of the contract, Jet2 operated flights to and from Blackpool for four years from March 2006, subject to the acceptance of flight schedules by the Airport. The Airport's usual opening hours were, as notified to the Civil Aviation Authority, between 7am and 9pm daily, although such opening hours were not set out in the contract. Airports are allowed to operate outside their usual opening hours, subject to notification to the CAA. During the four-year period, Jet2 operated regular flights to and from the Airport outside its usual opening hours.

However, due to the additional financial costs of keeping the Airport open outside of these hours, the Airport made significant operating losses since the execution of the contract and notified Jet2 on 22 October 2010 that it would no longer accept flights operated by Jet2 outside its usual opening hours. This meant that Jet2 had only one week to rearrange its flight schedule and forced Jet2 to divert two of its flights from Blackpool to Manchester at short notice.

The first instance proceedings

Jet2 commenced proceedings against the Airport and sought damages for breach of contract as well as a...