Best Endeavours vs Reasonable Endeavours Clauses
Commercial contracts commonly have clauses referring to “best endeavours” and “reasonable endeavours”. Whilst on the face of things, there does not appear to be much of a difference between the two, you should be aware of the commercial implications of such wording.
Historically speaking, the courts have interpreted this term as being where a party shall take “all those steps in their power which are capable of producing the desired results”. Obviously, this sets a high burden on the parties, however, it is not an absolute obligation as the notion of reasonableness applies.
One expression of best endeavours is that it requires “all that reasonable persons reasonably could do in the circumstances” within the commercial context in which the contract operates.
Whereas the interpretation of reasonable endeavours is built on a more subjective basis, with an emphasis on weighing up the clause against the commercial considerations (i.e. the cost of fulfilling the endeavours clause). It is thought that a party who is subject to such a clause should not have to sacrifice its own commercial interests.
Generally, the courts will look to uphold an endeavours clause particularly where the agreement is being performed. However, despite this, it should be borne in mind that any type of endeavours clause should be interpreted considering the relevant and factual backdrop, as well as the commercial situation when the contract was agreed.
At Foskett Marr Gadsby & Head LLP, we have the expertise and the experience to guide you through the everchanging commercial and legal scenery. Should you wish to speak further about this with someone, then please either contact our Business team on 01992 578642.