Jet2.com Ltd v Blackpool Airport Ltd [2012] EWCA Civ 417

As we discussed in the last edition of the Update, the High Court’s decision in this case considered the meaning of the phrase “all reasonable endeavours”. The Court of Appeal focused on the meaning of the phrase “best endeavours”.

In 2005 Blackpool Airport Ltd (BAL) entered into an agreement with Jet2.com whereby BAL would provide an operating base from which Jet2.com would run its low-cost airline. As part of this agreement BAL and Jet2.com both agreed to use “best endeavours” to promote Jet2.com’s business. BAL was also to use “all reasonable endeavours” to provide a cost base that would facilitate Jet2.com’s low prices. There was no further discussion of what these endeavours might entail and no reference to BAL being required to operate outside of normal hours.

BAL had not been profitable, a fact which was compounded by Jet2.com’s business often requiring that BAL’s airport operate outside normal hours. By 2010 BAL had grown frustrated with this situation, and sent Jet2.com a letter giving notice that BAL would no longer accept any more arrivals or departures outside of its normal hours. In response, Jet2.com brought an action for breach of contract seeking damages and a declaration that BAL was obliged to accept flights outside of normal operating hours. Jet2.com succeeded in obtaining damages and an injunction forcing BAL to accept early and late flights, but the judge stopped short of awarding the declaration sought.

The meaning of “best endeavours” was the main issue in BAL’s appeal. Jet2.com had argued that the “best endeavours” clause required BAL to service any flight between 6am and midnight, and to do its best to service flights outside those hours. BAL contended that the clause was too ambiguous to be enforceable, or alternatively that BAL was entitled to take into account its own commercial interests in deciding what “best endeavours” required. This, BAL argued, would mean there was no obligation to handle aircraft outside its normal operating hours if the agreement did not cover the cost of doing so.

The Court of Appeal, by a majority of two to one, upheld the High Court’s judgment that BAL had breached the agreement. All three justices agreed that a “best endeavours” clause could be unenforceable if: (i) it was sufficiently uncertain; and (ii) there was no objective criterion by reference to which it was to be judged. However, the majority felt the obligation to promote Jet2.com’s business was sufficiently clear. The Court also held that although what constitutes “best endeavours” will ultimately depend on the facts of the case, such a promise could indeed require a business to incur loss or expense and so to act against its own commercial interests. The exception to this was that where a business was clearly failing, there would not be a requirement to continue incurring further losses.

The meaning a court gives to an “endeavours” clause may be significantly more onerous than the party making the promise intended. Consequently such obligations should defined or explained by reference to specific obligations. Particular caution should be exercised when including the phrase “best endeavours” which may require a party to act against its own commercial interests.