Endeavours clauses, such as "best endeavours" and "all reasonable endeavours", often provide a sticking point in the negotiation of commercial contracts.
The traditional understanding has been that the requirement of "best endeavours" creates a more stringent obligation. However, jurisprudence on the comparative operation of these terms is far from clear. Whilst case law has often indicated that there is a spectrum of stringency provided for by varying endeavours clauses this is hard to reconcile with the reasoning and definitions used by the courts.
When defining "best endeavours" the judiciary have made an armour-plated link with reasonableness given "best endeavours" is defined in the recent case of Midland Land Reclamation Limited v Warren Energy as requiring "the doing of all that reasonable persons reasonably could do in the circumstances." In defining "best endeavours" with such reliance on the standard of reasonableness the courts appear to have removed the previously felt clear distinction between "best endeavours" and "all reasonable endeavours."
In this context it is interesting to note the judgement issued in August 2007 in the case of Waters Lane and Anor v Sweeney and Ors in the New South Wales Court of Appeal. It should be borne in mind that Australian authority is not binding in UK courts - however, they are considered persuasive and have been followed in the past.
In this case Waters Lane was seeking to purchase, rezone and develop 200 hectares of land currently owned and being used as a horse riding range by Sweeney. The Heads of Agreement entered into prior to sale required that Waters Lane use "all reasonable endeavours" to obtain rezoning and development consents.
Waters Lane adopted what was described as a "softly, softly" approach to obtaining the necessary consents, which included, in part, waiting for key environmental and planning regulatory reforms that they believed would help them to gain the requisite consents.
Sweeney initiated proceedings claiming that Waters Lane's approach was in material breach of the requirement to use "all reasonable endeavours".
Tobias J held that the conduct of Waters Lane whilst commercially prudent was in violation of the requirement to use "all reasonable endeavours". In interpreting the term he saw fit to apply the same test as previously applied in relation to "best endeavours" that a party bound by such a clause was required to do all he reasonably could in the circumstances to achieve the contractual objective, but no more. In applying this test he specifically stated that "if this means there is no relevant difference between…"all reasonable endeavours" and "best endeavours" then so be it."
In light of this judgement and the preceding UK authority it appears that there is a substantive case for considering that there is no practical difference between the burdens created by the terms "all reasonable endeavours" and "best endeavours".
The third principal endeavours clause, reasonable endeavour, was not considered in this case. Thus, in the absence of further authority it should be considered to continue to operate as creating a less onerous obligation which requires that the contractual obligation be considered of prime importance amongst all relevant commercial considerations.
However, regardless of the endeavours clause used it is likely to be the context in which it is set that ultimately determines its requirements. The stringency of an obligation will be largely dependent on the clarity and specificity of the obligation to which it relates. An obligation that simply requires that something be done, regardless of the endeavour clause employed, will likely create a less onerous obligation than were the clause to specify the steps that needed to be taken (Rhodia v Hunstman) . Thus the principal drafting consideration should always be the obligation itself and not the endeavour clause that is attached to it.