Contracting parties will often try to limit or qualify the extent of their obligation by making it subject to "reasonable endeavours", "all reasonable endeavours" or "best endeavours". Absent such wording, performance of the obligation will be absolute and any failure to achieve the intended objective will result in a breach of contract.
What each of these three phrases means in practice, and the extent to which they can limit an obligation, has long been considered by the courts – most recently by the Court of Appeal in the case of Jet2.com Limited v Blackpool Airport Limited.
This latest decision underlines the critical importance of drafting clear and sufficiently specified objective criteria upon which to assess whether a party's endeavours were in fact adequate, to ensure the commitment is to be legally enforceable.
In this case, the Court of Appeal considered a dispute between Jet2.com and Blackpool Airport over the legal effect of clauses requiring the exercise of "best" and "all reasonable" endeavours.
Both parties were to cooperate together and use their best endeavours to promote Jet2.com's low cost services. Blackpool Airport was also required to use all reasonable endeavours to provide a cost base that would facilitate Jet2.com's low cost pricing.
Key points:
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Courts will generally be minded to hold an obligation to use best endeavours as enforceable – unless the purpose intended to be achieved by the endeavours is too vague or no criteria has been provided to allow for the assessment of whether best endeavours have been or can be used.
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Agreeing to use best endeavours in the performance of an obligation is an admission by that party that it may well incur a financial cost in doing so – an undertaking to perform cannot be avoided simply because it becomes contrary to their commercial interests to do so.
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The extent to which a party, who has undertaken to use best endeavours, will be required to act against its own financial interests will depend on the nature and terms of the contract in question.
Comment
This case serves as an important reminder to those drafting contracts – ensure that obligations, and the steps required to be taken to satisfy those obligations, are drafted in a sufficiently clear manner to ensure certainty and avoid costly disputes over the precise extent of those obligations.
A final point of note is that in the particular circumstances of the case it was agreed that "best endeavours" and "all reasonable endeavours" were intended to mean the same thing. But drafters take note – this is not necessarily always the case and the meaning of each phrase will very much depend on the context in which they are used.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.