Reasonable and best endeavour obligations: how to use and interpret them in your contract

Endeavour obligations provide a happy medium between an absolute obligation to satisfy a contractual commitment and failing to fulfil the same. When a party “endeavours” to do something it is stating that it will attempt to do so. The standard at which a party is held depends on context and interpretation with English law recognising three commonly used obligations:

• Reasonable endeavours
• All reasonable endeavours
• Best endeavours

Reasonable endeavours

Out of the three endeavour obligations “reasonable endeavours” is said to be the least onerous. Case law suggests the question to ask when interpreting a clause with a reasonable endeavours obligation is:

“what would a reasonable and prudent person acting properly in their own commercial interest and applying their minds to their contractual obligation have done to try [to achieve the objective]”
Minerva (Wandsworth) Ltd v Greenland Ram (London) Ltd [2017] EWHC 1457

The key difference between this obligation and others, is that the obligor is not required to sacrifice its own “commercial interests” when trying to achieve the intended course of action. In these circumstances the obligation would be considered in light of context and the potential costs to the obligor of achieving the objective.

All reasonable endeavours

This obligation is commonly used as a middle ground between reasonable endeavours and best endeavours. However in practice, case law has done little to add clarity to the meaning of such wording which seems to be confused and muddled. Some judges have interpreted the words as close to a best endeavours obligation whilst others have re-iterated the position that such wording does not require the obligor to go against its commercial interests.

Best endeavours

Best endeavours is by far the most stringent of the three types of obligations. The Court of Appeal has stated that these types of obligations require an obligor:

“to take all those steps in their power which are capable of producing the desired results … being steps which a prudent, determined and reasonable [obligee], acting in his own interests and desiring to achieve that result, would take”
IBM United Kingdom Ltd v Rockware Glass Ltd [1980] FSR 335

In short, all steps an obligor could have taken to meet the objective should be taken, regardless of expense and cost.

Context is king

Whilst we can provide a brief summary of what the general intention of these three types of obligations is, the sheer volume of case law provides a variety of factors which must considered when interpreting these words.

In short, context is king, the case of Arsenal Football Club Plc v Reed [2014] EWHC 781 adds weight to this argument. Arsenal FC had agreed to:

“use its reasonable endeavours to supply goods … at prices which are comparable to the lowest wholesale prices charged by [AFC] to other market traders“

In this case, the court stated that use of “reasonable endeavours” was in connection to minimum quantities, location and time only. The obligation did not extend to supplying goods to Reed if it stopped supplying goods to other market traders.