Jennifer Chappell, senior associate at Bircham Dyson Bell LLP, is warning property owners to be wary of 'best endeavours' clauses in contracts which could mean that their own commercial interests may have to be sacrificed to fulfil their contractual obligations.
The issue was highlighted in a Court of Appeal case between Jet2.com airlines and Blackpool Airport. Jet2.com brought proceedings claiming the airport was in breach of the best endeavours obligation to promote its low-cost services and that the airport was required to remain operational 'out of hours' even though doing so might put it in financial dire straits.
"The 'best endeavours and 'reasonable endeavours' obligations can crop up in any commercial contract and the parties must be sufficiently certain as to what they mean in the surrounding commercial context" explains Jennifer Chappell.
"So for example, if a property owner were to sell a property subject to another party getting planning consent and the contract stated that the other party should use their 'best endeavours' to assist with getting the consent, then that party must be prepared to incur costs in time and money to aid the process. Reasonable endeavours would mean taking a reasonable course of action and co-operating with the other party, but not necessarily take on any financial burden.
"Since the decision in Jet2.com, those who have signed up to 'best endeavours' must be aware that they have to do everything possible to assist in the process, even if it is to their financial detriment and requires significant expenditure".
"I would urge anyone entering into commercial contracts to avoid agreeing to use best endeavours. Alternatively make sure you understand what "best endeavours" means and set out the parameters of what you are and are not expected to do - ultimately it may cost you time and money."