What does “all reasonable endeavours” mean?

18-02-2022


What does “all reasonable endeavours” mean? In a recent case[1] the High Court considered plans to develop an “eco town” in North West Bicester. The claim arose out of the proposed development of part of a larger site through a joint venture involving some of the parties to the litigation.

It is interesting because the Court threw light on the concept of “all reasonable endeavours” and what this means in terms of the extent of a party’s obligations.

It arose in relation to a heads of agreement relating to the property development, which included a provision to “use all reasonable endeavours” to enter into a final binding agreement by a certain date.

The court identified three types of endeavours clauses. The first is simply to use “reasonable endeavours”, which means that if the party with the obligation adopts one reasonable path then the obligation is satisfied. The second is to use “all reasonable endeavours”. This is normally interpreted as requiring all reasonable paths or actions to be exhausted. The court considered there to be little difference between such a clause and a duty to “use best endeavours”.

The court went on to say that these broad categorisations do not tell the whole story, since the exact extent of the obligation will depend on the precise wording and context in which that wording arises.

In relation to an obligation to use “all reasonable endeavours” this will involve active endeavour by the party responsible. Simply being passive or inactive is likely to be construed as a potential breach of contract.

If the party with the benefit of the obligation to use all reasonable endeavours can identify a reasonable course of action to satisfy the obligation, then the party with the burden of the obligation can be required to explain why it was not required to follow that course of action.

The question whether the taking of a particular course of action is a “reasonable endeavour” will be subject to assessment by the court of whether it would have had a significant or substantial chance of achieving the desired result. If there is an insuperable obstacle to achieving the desired result, this may relieve the party with the obligation from having to continue seeking to use “reasonable endeavours”.

In summary, when drafting commercial contracts, including “all” before “reasonable endeavours” will make a material difference to the extent of the obligation, bringing it close to the potentially onerous level of “best endeavours”. Where there is an obligation to use “all reasonable endeavours”, the relevant party must seek to use all reasonable paths and actions to achieve the desired result.

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[1] Brooke Homes (Bicester) Limited –v- Portfolio Property Partners Ltd and Others  2021 EWHC 3015 (Ch)


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