“Reasonable endeavours”, “all reasonable endeavours” and “best endeavours” are quaint phrases unlikely to appear in the tabloid press. But they have saved many a contract negotiation deadlocked over an obligation to do something. One party gets the benefit of the obligation while the other has the comfort of knowing that it is not guaranteeing full performance. If the parties later disagree about performance of the obligation, however, it becomes rather important to know what the relevant phrase means. Jet2.Com Ltd v Blackpool Airport Ltd not only confirms that there is no easy answer but also shows that a party agreeing to an endeavours clause might even be bound to act against its own commercial interests.
Jet2.com, a low cost airline, has a 15-year contract with Blackpool Airport Limited that requires both parties to use “best endeavours” to promote Jet2’s low cost services from the airport. BAL also has to use “all reasonable endeavours” to provide a “cost base that will facilitate Jet2.com’s low cost pricing”.
For years Jet2, with the support of BAL, operated some flights outside the airport’s normal operating hours, even though the cost of opening the airport to service a single flight greatly exceeds the revenue from the operation. Following a change of ownership, however, BAL advised Jet2 that it would no longer accept flights outside its normal operating hours.
The contract says nothing about operations outside normal opening hours and in the ensuing litigation the court had to consider whether BAL’s “best endeavours” and “all reasonable endeavours” obligations (which the parties agreed meant the same) required it to open outside normal operating hours, even though this would be loss making.
BAL said that it only had to act in a way consistent with its commercial interests but the court disagreed. It said that “all reasonable endeavours” will not always mean the same thing in different contexts.
When applied, for example, to an obligation to obtain something from a third party the sacrifice of a party’s own commercial interests is not required but in this case BAL was in serious breach of contract in setting conditions on its performance of the contract with Jet2.
It could not pick and choose what to do in the light of what suited it or its owner financially. It was “improbable” that the parties would have used an expression in the contract to mean that one of them could limit or abandon performance once it became commercially undesirable or unprofitable. BAL’s “all reasonable endeavours” obligation was, however, less than an absolute commitment to provide the specific operating hours regardless throughout the fifteen year period and determining whether best endeavours have been used is highly fact sensitive.
While resorting to one of the endeavours phrases may therefore provide a short term fix to get a deal done, its effect may not be so easy to determine. The Jet2 case indicates that, for the party with the obligation, the phrase might not necessarily prove to be a soft option.