Most people are familiar with, and will have seen, whether in leases or other commercial contracts, the requirement on a party to use best endeavours or reasonable endeavours to perform a particular obligation.
There is perhaps an assumption that they mean the same thing, and that it’s just a particular lawyer’s choice of words, but this is wrong. They do mean very different things and advice should always be taken.
This is a high threshold with a heavy burden and it should not be agreed to, if possible. To comply with the obligation you must leave “no stone unturned”, as a case from 1911 put it, in trying to comply with the obligations contained in the agreement. You have to take all steps that are capable of being taken to produce the desired results. These are steps that a prudent, determined and reasonable person acting in his own interest would take.
Whether there has been compliance will be a question of fact. Typically, however, the Courts would expect to see the party under the obligation expending time and money to secure compliance (if so necessary in order to achieve a goal), and potentially in considerable amounts. There is no need to go as far spending so much that the financial stability of a company is threatened but something substantial is required.
This is a less onerous obligation. There may be a number of reasonable courses which could be taken in a given situation to achieve a result. An obligation to use reasonable endeavours only requires the party to take one reasonable course.
Contrast this with best endeavours which requires a party to take all reasonable courses he can. A company will still be expected to incur some expense and time in seeking to comply with its obligation but it will not have to go so far that it financially and commercially disadvantages the party.
There is a significant difference between the obligations imposed by a reasonable endeavours clause and a best endeavours clause. When contractual terms are being negotiated, care is needed as to the final words that are used. At a time when parties are looking at ways of claiming damages, or even getting out of contracts, it is important to know what you have signed up for and that it is achievable.