The Club is often asked to distinguish the difference between reasonable endeavours and best endeavours.
Where a clause in a contract exists that requires a company to use reasonable endeavours to obtain a third party’s consent and that contract contains specific steps that have to be taken as part of the exercise of those reasonable endeavours, the company is obliged to take those steps even if they are detrimental to its own commercial interests.
The Judge in a recent case in England said that reasonable endeavours is a less stringent obligation than best endeavours. Generally, reasonable endeavours will not require a party to do anything contrary to its own commercial interest but may involve that party following a reasonable course of action in order to attempt to bring about the desired result. Best endeavours would generally involve a party following every reasonable course of action to bring about the desired result, short of sacrificing his own commercial interest. Both are to be distinguished from an absolute (i.e. unqualified) obligation to bring about a specific result.
If you are a party bearing the burden of an obligation under a contract, you should always try to negotiate the use of reasonable endeavours to fulfil such an obligation. If, on the other hand, you are the party with the benefit of that obligation, you should try to obtain from the other party a duty to use best endeavours. If, however, the other party will not accept best endeavours, the next best option would be to ask the party to use reasonable endeavours and then list a number of precise steps that would constitute examples of steps that need to be taken in order to satisfy the test results of reasonable endeavours.
The Club would like to thank Craig Neame of Holman Fenwick & Willan in London for bringing this to the Club’s attention.