In our recent article, Common legal terms, real business meanings: Reasonable, all reasonable or best endeavours?, we evaluated the meaning of endeavours clauses and the obligations on parties to a contract containing such terms. The Court has once more considered the scope of a ‘reasonable endeavours’ clause in a recent High Court case, Ampurius NU Homes Holdings Limited v Telford Homes (Creekside) Limited[1]. Such cases provide guidance on the meaning of endeavours clauses which are often incorporated into contracts, including those in the Food and Drink sector.

Ampurius was in fact decided on another point of law, but in doing so the Judge commented on the meaning of reasonable endeavours and what steps he considered that the party to the contract had to take in order to have complied with the relevant clause.

The clause in question required Telford to “use its reasonable endeavours to procure completion of [building works] by [a specific date] or as soon as reasonably possible thereafter”. The building work was put on hold due to funding difficulties. Telford submitted that provided it had made reasonable endeavours to obtain funding, it would not have been in breach of the clause if it failed to complete the works due to funding problems or, in other words, that ‘reasonable endeavours’ included financial resources. The Judge disagreed; Telford’s efforts to obtain funding did not amount to reasonable endeavours. The Judge did not consider that the term ‘reasonable endeavours’ should, in the context of the time of completion, include any matters which do not directly relate to the completion of the works, but is limited to “matters that directly relate to the physical conduct of the works”, such as adverse weather conditions.

The Judge’s comments in respect of the meaning of the reasonable endeavours clause in this case are not binding, but provide an example of the way in which the Courts may interpret such clauses. In this instance, a strict interpretation was adopted as to what action should have been taken in order to meet the requirements of the clause.

The problem for Telford lay in the way in which the reasonable endeavours clause was drafted: it required Telford’s efforts to be directed at completion of the works. Telford could not do that because it ran out of money. If the clause had been more widely drafted, and perhaps diluted by removing the word ‘procure’ a different result could have occurred. Using the following formula might have helped to achieve this:

“[The Contractor] agrees to use its reasonable endeavours to take the necessary steps (physical and/or financial) to be able to complete [the work] by [date] or as soon as reasonably possible thereafter”

For further information, please contact:

Nicola DanielsAssociate+ 845 497

[1] [2012] EWHC 1280 (Ch)