In Focus Construction Interiors Limited v Spaceworks Design Group  NZHC 2211, the High Court considered the extent of a party's liability to fulfil a 'reasonable endeavours' obligation.
Following a breakdown in the parties' relationship, a settlement agreement between Focus Construction Interiors Limited and Spaceworks Design Group was executed which included a clause stating that Spaceworks would make reasonable endeavours to refer $3m of work to Focus within four years of the agreement date. Four years later, Spaceworks had only referred $512,824 worth of work.
The Court found that the clause was enforceable, as the objective of referring $3m of work was sufficiently certain. However, no breach was found, as Spaceworks was found to have acted reasonably in the circumstances.
The Court noted that a 'reasonable endeavours' obligation will not usually require the obligor to sacrifice its own commercial interests, unless the contract requires that certain steps have to be taken. The Court distinguished 'reasonable endeavours' terms with 'all reasonable endeavours' or 'best endeavours' terms. Where several reasonable courses of action are available to achieve the desired outcome, a 'reasonable endeavours' obligation only requires the obligor take one of those reasonable courses. A 'reasonable endeavours' obligation is less stringent than a 'best endeavours' obligation.
See the Court's decision here.