A recent decision in the High Court suggests that the courts are becoming more willing to bind parties to their promise to use “all reasonable endeavours” by giving legal effect to its own interpretation as to what the parties agreed.
This reading into the commercial background, with any determination being at the discretion of the courts, means that greater emphasis needs to be placed on defining each party’s obligations when negotiating endeavours clauses. But what are the options available when drafting these clauses?
Endeavours clauses: the options
Case law in this area has centred around three types of endeavours clauses; “best endeavours”, “reasonable endeavours” and “all reasonable endeavours”.
Taking these in turn, “best endeavours” obliges a party, having identified the reasonable steps that could be taken in the particular circumstances, to exhaust all of those options in order to satisfy the obligation. This means that the obligor could be required to act outside of its own commercial interests under such a clause, though it should be noted that the concept would not extend to requiring that party to take steps that would cause serious detriment.
