Endeavours clauses are a way for parties to agree to try to meet specified objectives without undertaking to be bound by an absolute contractual obligation or allowing an unenforceable ‘agreement to agree’ to make its way into the contract. This option is often useful where the completion of the relevant objective depends on matters outside of the parties’ control and remains uncertain. However, due to their nature, endeavours clauses are notoriously difficult to define with any certainty with respect to what is actually required of the relevant party. The distinction between the most common types of endeavours clauses, ‘best endeavours’, ‘reasonable endeavours’ and ‘all reasonable endeavours’, is also ambiguous.
In general, it is considered that ‘best endeavours’ will require more by way of performance of the contractual obligor than ‘reasonable endeavours’ and ‘all reasonable endeavours’ will require less than ‘best endeavours’ but more than ‘reasonable endeavours’. However, what is clear is that there is no uniform meaning for each term and that the interpretation applied will depend largely on the commercial and contractual context. The Jet2 case (addressed below) has created some uncertainty regarding what is required from each obligation and held that “[T]he meaning of the expression remains a question of construction not of extrapolation from other cases … the expression will not always mean the same thing”1. Therefore, it is possible that the performance required by the same endeavours clause will be interpreted differently across different contracts and parties.
In construing the meaning of an endeavours clause in a particular situation, the court will apply the general rules of contractual interpretation and will have regard to (at the time that the contract is formed) the express wording of the clause, the contract as a whole, the commercial objective of the contract and the surrounding commercial context. The court will consider whether the undertaking has been satisfied at the time of performance, which may mean that the prevailing circumstances might not be quite what the parties had anticipated. Distilling an established set of rules is therefore difficult. However, the case law in this area provides some useful guidance as to how to approach the different drafting in practice.
Best endeavours
It has been held that, in order to exercise ‘best endeavours’, a party must take all steps which “a prudent, determined and reasonable”2 obligee would take when acting in his own interest and desiring to achieve that result. The obligor must therefore consider what a reasonable obligee would do when considering what steps it should take. In contrast to the other forms of endeavours clause, a best endeavours clause may require an obligor to incur financial expenditure in meeting the defined purpose and/or act in a manner contrary to its own commercial interests, as in the Jet2 case3. In this case, the effect of the endeavours clause meant that Blackpool Airport was required to operate outside of its normal hours for the Jet2 airline notwithstanding that this caused the airport to suffer a loss.
Taking guidance from case law, in order to satisfy a best endeavours clause, an obligor should do everything that they can reasonably do and ensure that it has been genuine in its attempts to carry out the desired objective.
All reasonable endeavours
It is thought that this term represents a middle ground between ‘best endeavours’ and ‘reasonable endeavours’. This can make its interpretation in practice difficult as it will, as ever, depend on the context. Whilst there is some uncertainty in the case law, it has been suggested that an ‘all reasonable endeavours’ clause requires efforts very similar to that of best endeavours with the key distinction being that an obligor subject to an ‘all reasonable endeavours’ clause is less likely to be required to sacrifice its own commercial interests4 .The terms of the contract will be of key relevance.
Reasonable endeavours
This is the least onerous variation of the endeavours clause. The conduct required to fulfil this obligation will largely depend on the wider context, including the underlying agreement, the factual background and the wider commercial context. However, it may suffice for the relevant party to take one of several possible courses of action, provided such course of action is deemed to be ‘reasonable’. Importantly, an obligor is generally able to balance the weight of the contractual obligation against its own commercial considerations. If, however, the desired objective is clear, a reasonable endeavours obligation can still represent a demanding commitment.
The obligation for a party to use reasonable endeavours can often be seen in a force majeure clause – i.e. – a party affected by a force majeure event must use reasonable endeavours to overcome the effects of such event before it can be relied upon as a force majeure. The interpretation of ‘reasonable endeavours’ in this context has recently come before the Supreme Court5 which held that a party relying on the force majeure clause and demonstrating that they have used ‘reasonable endeavours’ to overcome the effects of the event or state of affairs did not have to compromise by accepting an offer of non-contractual performance from the other contracting party, unless there is clear wording to that effect.
Takeaways
Whilst there is some guidance in the case law as to how to interpret the different variations of endeavours clauses, what remains clear is that in practice the meaning of a particular endeavours clause will largely depend on the precision of the desired objective, the predictability and ease of the action required, the contract as a whole and the overall commercial and factual context.
In order to advance commercial certainty and ensure enforceability, parties should add any specific steps and/or measures envisaged to satisfy the endeavours obligation and should clearly express the desired objective in the contract. In contrast, where the objective and any action required are obscure this will make the enforcement of any endeavours clause more difficult. Therefore, whilst the meaning of the clause will depend largely on the context, a defined and attainable objective and a stringent variation of the endeavours clause, such as ‘best endeavours’, will aid enforcement against the obligor.
An obligor seeking to comply with an endeavours clause should consider recording in detail all steps taken towards the satisfaction of the obligation, in the event of a subsequent dispute.
1 Jet2.com v Blackpool Airport Ltd [2011] EWHC 1529 (Comm)
2 IBM United Kingdom Ltd v Rockware Glass Ltd [1980] FSR 335
3 Jet2.com v Blackpool Airport Ltd [2012] EWCA Civ 417
4 Rhodia International Holdings Ltd v Hunstman International LLC [2007] EWHC 292 (Comm); Brooke Homes (Bicester) Ltd v Portfolio Property Partners Ltd [2021] EWHC 3015 (Ch)
5 RTI Ltd v MUR Shipping BV [2024] UKSC 18
Our glossary of key terms referenced in this guide
For ease of reference, we have summarised some key terms referenced in this guide. Click on the links to where these terms are discussed for context and guidance.
All reasonable endeavours: No uniform meaning, but this term is thought to represent a middle ground between ‘best endeavours’ and ‘reasonable endeavours’.
Best Endeavours: No uniform meaning, but it has been held that, in order to exercise ‘best endeavours’, a party must take all steps which “a prudent, determined and reasonable” obligee would take when acting in his own interest and desiring to achieve that result.
Reasonable endeavours: No uniform meaning, but this is thought to be the least onerous variation of the endeavours clause. It may suffice for the relevant party to take one of several possible courses of action, provided such course of action is deemed to be ‘reasonable’. Generally the weight of the contractual obligation can be balanced against the performing party’s own commercial considerations.
This piece forms part of our Contract Interpretation guide. The guide compiled by our Dispute Resolution team and looks at the meaning of some commonly used, but also commonly litigated, contractual terms. To view the full guide click the ‘Download File’ button or click here.
