Similar Phrase with Different Legal Meanings

It is common within a commercial contract for a party to accept Endeavours obligations, where the party is only required to attempt to achieve an outcome rather than to agree achieve the outcome.

The three prospective types of endeavours obligation are:

Best Endeavours – This requires a party to use its finest exertions, take every step, and explore all options available to deliver the requested result. By committing to the Best Endeavours, the party must seek to provide the outcome even if this prejudices their positions, such as in situations where the cost to achieve the outcome is greater than the benefit attached to the outcome; the party must seek to achieve the outcome even where it makes no commercial sense.

Reasonable Endeavours – A party's conduct must be appropriate to achieve the outcome. As long as the party's conduct is proper, even if not all reasonable actions have been taken, a party can argue that they have discharged their performance obligation. In this case, the party is not obligated to act against their interests to achieve the outcome.

All Reasonable Endeavours – This requires a party to go further than Reasonable Endeavours and take all reasonable actions and opportunities to reach the outcome. This requirement is less than best endeavours as this is not an absolute obligation. A party is not required to substantially prejudice their position, albeit it is more onerous than reasonable endeavours.

The case of Brook Homes (Bicester) Limited v Portfolio Property Partners Limited and Others [2021] allowed the High Court to guide the "all reasonable endeavours" obligation. The parties had agreed to a binding heads of agreement where the respondent pledged to expend all reasonable endeavours to iron out the more minor details and complete the sale. In this case, the party failed to advance negotiations to complete the sale. Therefore, the Court held that they had breached the obligation of all reasonable endeavours. The consequences of this failure were that damages of £13.4 million were awarded, demonstrating the significance of choosing the correct wording.

It could be argued that the best practice would be to agree on the term with the least obligation, which the other party is comfortable agreeing to, in this example, would be Reasonable Endeavours. However, in situations where the other party is not comfortable agreeing to Reasonable Endeavours. It is best to agree to the below terms in each case outlined:

• Reasonable Endeavours could be appropriate if the obligation is convoluted and reliant on elements over which the party has no influence, such as the awarding of a business licence.

• Where a party is optimistic that it can realise the obligation, such as an engineering firm completing a design with consultants with relevant experience and qualifications available to work, it could be appropriate to consider using All Reasonable Endeavours or Best Endeavours.

It is worth noting the level of uncertainty with Endeavours obligations. Therefore it is worth parties detailing what steps would be expected rather than using an Endeavours obligation.

This blog's content is intended for information only and is not an alternative to legal advice. Velocity Dispute Management accepts no responsibility for the actions of another party as a result of this blog or the content of any third-party source this blog refers to.