A recent decision of the New South Wales Court of Appeal (NSWCA) has suggested that no significant difference may exist between the contractual phrases "best endeavours" and "all reasonable endeavours." In Waters Lane & Anor v. Sweeney & Ors, the NSWCA considered whether Waters Lane, a developer, had used "all reasonable endeavours" to obtain the rezoning of and the development consent for a property owned by the Sweeneys. Although the judge did not express a final conclusion on any difference between the contractual phrases, he effectively equated "all reasonable endeavours" with the interpretation of "best endeavours" previously provided by the High Court of Australia, in concluding that "all reasonable endeavours" required Waters Lane to do all it reasonably could to achieve the contractual conditions, but no more.
McCarthy Tétrault Notes:
The suggestion of no relevant difference between the contractual phrases contrasts with the general view of Canadian courts. In Canada, the corresponding terms more commonly used are "best efforts" and "reasonable efforts."
The principles relating to "best efforts" are set out in the 1994 decision of the British Columbia Supreme Court,
Atmospheric Diving Systems Inc. v. International Hard Suits Inc. The inclusion of a "best efforts" clause in a contract imposes a higher obligation than a "reasonable efforts" clause. A party with a "best efforts" obligation must take all reasonable steps to achieve the objective and leave no stone unturned. The standard of reasonableness is objective, being that of a reasonable and prudent party applying its mind to its contractual obligations. "Best efforts" includes doing everything known to be usual, necessary and proper for ensuring the success of the endeavour. Evidence that a party could have achieved the contractual condition may be evidence that the party did not use its best efforts. However, evidence that a party could not have achieved the contractual condition — inevitable failure — is not evidence that the party did not use its best efforts.
The concept of "reasonable efforts" only requires a party to a contract to do what is reasonable in the circumstances, all things considered. Reasonableness implies the use of sound judgment and a sensible view. "Reasonable efforts" does not require a party to undertake all efforts or to place itself in a position of undue hardship. In certain contexts, a commercial component is added to the contract in terms of obligating a party to make all "reasonable commercial efforts" to achieve an endeavour. The commercial component allows the party to consider profit and cost when determining what actions it must take to satisfy its contractual obligations.