Endeavours clauses are now commonplace in contracts. They are used when parties want to qualify an obligation by agreeing that each party will only attempt to fulfil that obligation. This flexibility is particularly useful when the obligation is dependent upon the action of a third party, such as the attainment of planning permission. Despite their extensive use, the meaning of such clauses is still subject to significant debate.
For a term to be enforceable, its meaning must be sufficiently certain. Where a dispute regarding meaning arises, interpretation is made in the round considering each case on its own facts. However, some useful guidance is available as to the different types of endeavour clauses used.
This imposes the greatest obligation, requiring the obligated party to act against its own commercial interests. However, it does not mean that the obligation must be completed at all costs. For example, it will not require a company to take any action which would ruin the company or to litigate a matter in which there was no chance of success.
'Reasonable endeavours' imposes a lesser obligation than 'best endeavours'. Where 'reasonable endeavours' applies it is widely accepted that a party need not sacrifice its own commercial interests, but will be required to incur reasonable, limited expenditure to satisfy the obligation.
Despite the clause's relatively 'light-touch', if drafted correctly, it can impose enforceable obligations. Therefore, parties should not take these clauses lightly. Ignoring these clauses completely, or not fully appreciating what is required under them, can open a party up to a claim for breach of contract.
'All reasonable endeavours'
This is a compromise between 'best endeavours' and 'reasonable endeavours' which may require expenditure from a party under the obligation. However, it is less clear whether a party will need to sacrifice its own commercial interests.
In the most recent headline case, the parties agreed that 'all reasonable endeavours' had the same meaning as 'best endeavours' which can impose a much more laborious obligation than initially envisaged.
To minimise doubt it is best to set out the parameters for what each party must do under the contract. These may include:
- setting caps on expenditure and time;
- if litigation is involved, whether there is an obligation to appeal a decision;
- the exclusion of anything which a party is not prepared to do; or
- the extent to which a party is entitled to protect its own interests, is required to act in the interests of the other party, or meet an objective standard of behaviour.