Endeavour clauses provide for a middle ground between absolutely satisfying a contractual obligation and completely failing to do the same.  These clauses are commonly used in construction contracts to allow for parties to ‘attempt’ to achieve the level of standards required by a specific project. 

It is important that when drafting these clauses that the language used is clear and unambiguous otherwise it may be unenforceable: Jet2.com Ltd v Blackpool Airport Ltd [2011] EWHC 1529:

The meaning of the expression remains a question of construction not of extrapolation from other cases…the expression will not always mean the same thing.”

Although these clauses are commonly used in construction contracts, these contractual obligations often lack certainty in its choice of terminology.  The below will hope to facilitate the interpretation and application of the more frequently used endeavour clauses.

Reasonable endeavours

The “reasonable endeavours” obligation is considered to be the least burdensome of the three most used ‘endeavour’ obligations. 

Where this is the chosen standard of care, case law shows that the courts are more inclined to take into account subjective considerations by weighing the magnitude of their contractual obligation owed to the other party against “all relevant commercial considerations” including the cost of the course of action.  In light of the above, the obligation of the party would be determined based on its circumstances so that the obligor is not required to sacrifice its own commercial interests. 

Having said that, this less stringent obligation is not without teeth.  If the clause is drafted with a clear objective, it can prove to be an enforceable obligation which cannot be easily satisfied. 

All reasonable endeavours

This commonly used obligation is often implemented as a compromise between reasonable and best endeavours, however, in reality, it remains unclear as to how the obligation of “all reasonable endeavours” can be deduced. 

The decisions in case law with regards to the meaning of all reasonable endeavours are blurred.  Although some say that it is a middle position, case law seems to dispute this.

Contrary to the traditional view that it is a middle ground, the case of Rhodia International Holdings Ltd v Huntsman International LLC [2007] EHC 292 the judge stated obiter that the obligation of all reasonable endeavours in fact equates to the obligations of best endeavours:

obligation to use reasonable endeavours to achieve the aim probably only requires a party to take one reasonable course, not all of them, whereas an obligation to use best endeavours probably requires a party to take all the reasonable courses he can. In that context, it may well be that an obligation to use all reasonable endeavours equates with using best endeavours

The courts have also considered whether the all reasonable endeavours obligation would require a party to sacrifice its commercial interests to achieve the goal.  Again, this remains an area of ambiguity and is illustrated from the case of CPC Group Ltd v Qatari Diar Real Estate Investment Company [2010] EWHC 1535 when Vos J stated:

“It seems to me, therefore, that an obligation to use an all reasonable endeavours obligation does not always require the obligor to sacrifice its commercial interests”

The use of “always” take away from the conviction of his statement, fuelling the uncertainty in this area of law. 

Best endeavours

This last obligation is accepted as the most onerous of the three listed in this article.  Although this is not an absolute obligation, the test for the satisfaction of the same is stringent. The obligor is required to take all such reasonable steps which a determined and sensible party acting in its own interests would have taken in order to achieve the specific objective.

For the sake of clarity, all reasonable steps that could have been taken to achieve the result, should have been taken including incurring of expenditure. 

Conclusion

With the above in mind and in order to mitigate the risk of uncertainty concerning obligations provided for by “endeavour” clauses, it would be diligent to clearly define not only the nature of these obligations but also, the extent of such.  Any uncertainties should be dealt with expressly in the contract rather than relying upon the courts to interpret whether alternative levels of standards should be applied.