The scope of the terms ‘best endeavours’ and ‘reasonable endeavours’ has been considered by the English courts time and again. Recently, the Court of Appeal considered the validity of a ‘best endeavours’ obligation in a general contractual provision.
Jet2.com Limited v Blackpool Airport Limited  EWCA Civ 417
Jet2.com operated a low cost airline from Blackpool airport, operated by BAL. Jet2.com’s business model depended upon the airline being able to fly outside of normal business hours. Keeping the airport open through the night was unprofitable for BAL and, after unsuccessful negotiations between the parties, BAL gave notice to Jet2.com that it would withdraw its out-of-hours facilities. Jet2.com claimed damages for breach of contract based on the following obligation:
“Jet2.com and BAL will …. use their best endeavours to promote Jet2.com’s low cost services.”
The court held that, in order for the ‘best endeavours’ obligation to be valid, there had to be objective criteria against which the sufficiency of the efforts to comply could be judged. Despite the fact that the obligation was contained in a general provision which did not refer to out-of-hours operations, the court held that it was a clause which could be given a practical context, although when drafted its limits would have been difficult to define. In this case, the clause meant that BAL had an obligation to enable Jet2.com to ‘grow and succeed’.
With regard to the scope of the ‘best endeavours’ required of BAL, one of the judges (Lord Justice Longmore) said the following:
“The fact that [a party] has agreed to use his best endeavours pre-supposes that he may well be put to some financial cost, so financial cost cannot be a trump card to enable him to extricate himself from what would otherwise be his obligation.”
However, the amount that a party would have to pay to fulfil its obligation to use ‘best endeavours’ is fact specific. It may not extend as far as a party having to incur losses if the endeavours were unlikely to be successful.
- Drafting obligations which are qualified by using ‘best endeavours’ or ‘reasonable endeavours’ adds uncertainty to a contract because those terms are construed against the contractual background. Absolute obligations are clearer.
- ‘Best endeavours’ obligations are more certain in relation to specific obligations, rather than contained in a general ‘sweep-up’ clause.
- Consider whether you can add any objective benchmarks to judge the efforts made, for example:
- Can you set out any steps which must be taken?
- Can you make clear which party should bear the cost?
- It is possible for timeframes to be set to fulfil the obligation?
- Whose commercial interests should be taken into account?