Our colleague and guest blogger, Alison Williams, has been considering the issue of best, reasonable and all reasonable endeavours obligations - which are often found in section 106 agreements - and has the following to say on the point:
Planning law can be confusing enough at times, but it becomes so much more complicated when adding clauses to agreements which need to include a phrase (in relation to obtaining planning permission, for example) such as ‘all reasonable endeavours’ or ‘best reasonable endeavours’. Part of the problem when deciding which phrase to use is the question ‘what on earth is the difference between them?!’.
The term ‘reasonable endeavours’ is the lowest form of obligation. A person required to use ‘reasonable endeavours’ is required to use some endeavours, but need not act in any way which is against its own commercial interests. For example, the person need not take an action which makes it suffer loss such as taking legal action where the outcome may be doubtful.
In contrast, the term ‘best endeavours’ places a higher standard of obligation on the giver. It is certainly one of those terms that should be labelled ‘use with care’, since the standard for what is required may well change over time. A party under a ‘best endeavours’ obligation must pursue more courses of action than under an obligation to use reasonable endeavours, and has a greater obligation to litigate and to have to act in a manner which is contrary to one’s own interests.
So what about the term ‘all reasonable endeavours’? Well, there is some conflict as to what exactly this means. Some see it as a compromise between the two options outlined above, whilst others view it in the same way as ‘best endeavours’. Those giving any obligation may prefer to rely on the first argument in order to reduce the requirement on them to take action.
So how should the giver of an obligation seek to mitigate its effects? A number of options are possible, including setting a time limit on taking action or placing a limit on costs to be incurred, or possibly by excluding certain actions from the scope of the obligation. Taking all or any of these actions will help to provide clarity to all parties to an agreement and will give the giver of the obligation more peace of mind.