Endeavours Clauses: How Best To Deal With Uncertainty In Contracts?

Sometimes it is not certain whether an objective in a contract can be achieved, for example obtaining planning permission or entering into a contract with a third party. Rather than saying that the objective will be achieved, and risking a breach of contract, parties can agree that one of them will try to achieve it. But how hard does that party have to try, and what lengths do they have to go to?

Two commonly used phrases are 'best endeavours' and 'reasonable endeavours'. These sound quite vague but some general rules that courts have used to interpret these phrases help to establish what they mean in practice.

Best endeavours

This wording imposes a more onerous obligation than reasonable endeavours. Where the obliged party has to use 'best endeavours', it must take steps which a reasonable person acting in his own interests would take.

The party might have to:

act in the interests of the obliging party; pursue more than one avenue, and to keep going until all options are exhausted; and incur significant expenditure, for example it might have to bear the cost of litigation and the risk of failure. In Jet2.com Ltd v Blackpool Airport Ltd [2012] EWCA Civ 417, Blackpool Airport was required to open outside of its normal opening hours to accommodate Jet2 flights despite the significant cost in doing so, to satisfy the objective of promoting Jet2.com's low cost services. However, this is not the same as saying that the party absolutely has to achieve the objective. The obliged party:

is not required to take steps that would be commercially fatal, for example steps which would have a high risk of resulting in bankruptcy; and is not required to take steps that would have no prospect of success. Reasonable endeavours

An obligation to use reasonable endeavours to achieve an objective is much less onerous, although it can still be a significant burden.

The party:

does not have to sacrifice its own commercial interests, and what steps are reasonable to take will depend on the circumstances e.g. the party's financial resources and reputation; will usually only have to pursue one avenue, even where there are multiple courses which could be taken; and does not have to take steps that would be unlikely to result in success (unlike 'best endeavours' which obliges the party to take all steps unless there is no...