Although not common in the construction sector, contractual jargon which regularly confuses users is an ‘endeavours’ obligation.
Like reasonable skill and care, this is an input standard – often subjective, qualified and tricky to prove. But what is the difference between best endeavours and reasonable endeavours?
A spectrum of inputs
Under English law, reasonable endeavours is considered the least stringest requirement. But the most stringent is not best endeavours – the most stringest is an unqualified or absolute obligation.
For example, a contract could provide that ‘the seller will supply the goods by a specific date’. This is not subject to any subjective endeavours qualification. If you want the goods to be delivered on a specific date, and delivery is wholly within the seller’s control, use this style of obligation.
If the obligation is not wholly within the seller’s control, you may need to refer to endeavours. If you do, consider where on the spectrum your scenario sits.
In Rhodia, the court summarised what the terms mean:
- best endeavours = requires the party to take all the reasonable courses of action that it can to carry out the obligation and to explore them all to the extent reasonable (indistinguishable from all reasonable endeavours)
- reasonable endeavours = requires the party to take one reasonable course of action to carry out the obligation.
The courts have also said that when interpreting an obligation to use best/all reasonable endeavours to obtain something from a third party, a party does not have to sacrifice its own commercial interests (Jet2).
The obligation to use best/reasonable endeavours has to relate to achieving a particular object, and that object has to capable of being ascertained with certainty. So delivery of the goods is objectively certain, but agreement of a contract is not. If the object is too vague or elusive, or if there are no criteria against which the efforts can be measured, then the clause is too uncertain and is unenforceable (Dany).
For example, a clause requiring a party to use reasonable endeavours to get a permission or licence is sufficiently certain. However, a clause requiring a party to use reasonable endeavours to agree a contract is uncertain (an ‘agreement to agree’).
What should you do?
Consider carefully whether an obligations should be absolute or qualified, based on inputs or outputs, and how that should be described in a contract. Don’t leave the interpretation of your clause to chance!
Cases: Rhodia International Holdings Ltd. Rhodia UK Ltd. v Huntsman International Llc [2007] EWHC 292, Jet2.Com Ltd v Blackpool Airport Ltd [2011] EWHC 1529, Dany Lions Ltd v Bristol Cars Ltd [2014] EWHC 817
