Contracts and leases frequently make reference to “best endeavours” and “reasonable endeavours”. For example, a landlord may be under an obligation to use its reasonable endeavours to ensure that air conditioning is provided during normal office hours. Is there, however, a difference between the two terms?

The simple answer is yes. The Courts have held that the requirement to use best endeavours imposes a more stringent obligation but it is important to examine the distinction between the two terms.

The case of UBH (Mechanical Services) Limited v Standard Life Assurance Company [1990] BCLC 895 saw the Court describe reasonable endeavours as considerably less than best endeavours. So far, not particularly helpful! The Court went on to say that reasonable endeavours means an obligation to take action but only to the extent that such action does not cause any commercial or financial disadvantage. It may, therefore, be a fairly low threshold as a party can have regard to its own interests, financial or otherwise.

This whole subject was examined again by the Court in the recent case of Rhodia International Holdings Limited v Huntsman International LLC [2007] EWHC 292. In that case, the Court found that an obligation to use reasonable endeavours “requires a party to take one reasonable course, not all of them”.

Best endeavours goes that much further and the Rhodia case, referred to above, saw the Court say that “an obligation to use best endeavours probably requires a party to take all the reasonable courses it can”.

The case law, perhaps unhelpfully, says that best endeavours means what the words say and does not mean second-best endeavours. Perhaps the most helpful guidance can be found in the case of Pips (Leisure Productions) Limited v Walton [1982] P&CR 450 where the Court held that best endeavours does not go beyond the bounds of reason but is more than casual and intermittent activities. The person subject to the obligation must do all that a reasonable person could do in the circumstances.

Unfortunately, the meaning of the words can depend on the facts of the particular case. Best endeavours is ideally what you want, when drafting a contract, as it should provide some protection and guarantee as to performance but the facts may lead to the conclusion that it would be acceptable to do nothing at all. Consideration should, when drafting the contract, therefore perhaps be given to an absolute obligation being inserted by using words such as “shall” or “ensure”. An alternative may be to actually set out some criteria in the contract as to what the parties consider would be sufficient to satisfy the reasonable or best endeavours test.