Endeavours Clauses: If At First You Don't Succeed... Then What?

The answer to this question really depends on the type of endeavours clause that you have signed up to. Obligations to use "reasonable endeavours", "best endeavours", or "all reasonable endeavours" are littered throughout contracts and require one party to take measures to achieve something.

Although this legal shorthand is intended to dilute an absolute obligation, frequently it serves to introduce uncertainty since it is not always clear what needs to be done and, importantly, when effort can lawfully cease. If you are the one who is subject to the endeavours clause, it can require you to exercise a number of options to achieve an objective, it demands pro-activity, it can require significant expenditure and it can even require you to take legal action against a third party. Furthermore, since the obligation often bites hardest long after the contract has been filed away and the lawyers have gone home, endeavours clauses are fertile grounds for dispute.

A raft of recent case law on the matter has only sought to enforce this state of confusion which may leave you exposed to fulfilling obligations which you were not expecting.

The starting point is what the contract says. The Court construes the contract by reference to the intention of the parties, which is elucidated by the terms of the agreement. Those terms are considered in their commercial context. This impacts on the requirements of an endeavours clause in the same way as any other contract term. Since the facts of each case are different then so can be the lengths that each endeavours clause can require. This accounts for the raft of case law on such apparently well worn legal phrases.

Best/All/Reasonable endeavours

"Best endeavours" is often regarded as being at the most onerous of the endeavours clauses and should not be conceded without considerable thought. It means (helpfully) "not second best" and refers to what a "prudent, determined and reasonable person, acting in its own interests" would be prepared to do. Although it has been thought the case that "best endeavours" clauses are slightly more onerous than "all reasonable endeavours" clauses, recent case law has treated the terms as interchangeable.

How many attempts are required to be made to satisfy the best endeavours clause? The case of Rhodia International Holdings Ltd v Huntsman International LLC [2007] 1 CLC 59 provides the most concise guidance on this point for both best endeavours and all reasonable endeavours. In...