Meaning of ‘endeavours’

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

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

Takeaways

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. 

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. 

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.