Articles

''Best Endeavours'' or ''All Reasonable Endeavours''

Monday, August 28, 2017

What's the Difference?

Often in commercial contracts, parties agree that they will use their "best endeavours", their "reasonable endeavours" or their "all reasonable endeavours" to perform certain actions or to achieve a certain outcome.  But what do these terms mean in reality?  While there are no set definitions and much is dependent on the particular circumstances, we are able to make some practical comments about the requirements of each of these terms so you have a clear idea of what you are agreeing to.

"Reasonable Endeavours"
If a party promises to use or take "reasonable endeavours" to achieve a certain outcome, this means that a party is generally not required to take actions that might prejudice them unless they have specifically contracted to do so.  Rather than requiring a party to take every possible action, "reasonable endeavours" requires that party to take actions a reasonable person would do in the same circumstances. While a party can be expected to have an "honest try" at achieving the desired outcome, they would not usually be expected to perform tasks that may be to their detriment.

''Best Endeavours''
An obligation to use your "best endeavours" is much more onerous than to use your "reasonable endeavours".  While this is not an absolute requirement to do absolutely everything possible, it has been found that such an obligation is quite burdensome and may mean that the party contracting to use best endeavours may have to undertake everything practicably possible to fulfil its obligations even if this involves taking steps which incur financial loss (even significant loss) on their part.  However, it is important to keep in mind that the difference between incurring financial loss and having no regard for your own financial interest is quite pronounced.  

In the recent UK decision of Jet2.Com Limited 1, it was held that an airport which had a general obligation under an agreement with Jet2 – a low cost airline – to use its "best endeavours" to promote Jet2's airline gave rise to an additional obligation to allow Jet2's planes to arrive and depart outside the airport's normal operating hours, even though this would be at a financial cost to the airport.  Here the commercial circumstances are important because at the time of entering into the contract, the airport knew that Jet2 would be required to enter or to fly outside the standard times to make a profit but still agreed to use their "best endeavours" to promote Jet2's airline.  

"All Reasonable Endeavours"
It has been asserted in the past that the phrase "all reasonable endeavours" is somewhat of a middle ground between "best endeavours" and "reasonable endeavours".  However, while what is required will depend on the factual circumstances of each situation, many now consider that "all reasonable endeavours" imposes very similar potentially burdensome obligations upon that party as an obligation to use one's "best endeavours".  The addition of the word "all" has quite a substantial impact on the obligations that one party is required to perform, and therefore when conducting contractual negotiations, parties need to be aware that such a seemingly minor amendment could have dramatic implications beyond parties' control or may result in the sacrifice of that parties' financial interests.  

How to Avoid Problems
One way to avoid problems of interpretation is to make it quite clear what each party is required to do to meet their obligation by providing clear guidelines or boundaries around what is expected.  We are able to assist here, but these may include:

  • The time by which an obligation must be completed by;
  • Examples of what could be considered to be ''best'' or ''all reasonable'' endeavours;
  • Certain machinery or procedural requirements that the parties must follow; or
  • Whether the party performing the obligation is required to incur substantial financial obligation and, if so, up to a certain limit.

In all circumstances, if the intention is that a party is absolutely required to perform that obligation, then the wording should outline that they "must" do that action.  Alternatively, where some of the actions required are outside of the contracting party's control, or they may have to undergo considerable time, expense and effort to obtain that goal, then we are able to assist to ensure that the language used is toned down sufficiently so that such provision is not unjustly burdensome and reflects your understanding of the steps you will be required to undertake to complete your obligations.

Please kindly direct any enquiries to:

Andrew Knight on (09) 306 6730 (aknight@mcveaghfleming.co.nz) or
Harry Forsythe on (09) 306 6727 (hforsythe@mcveaghfleming.co.nz)

© McVeagh Fleming 2017

This article is published for general information purposes only.  Legal content in this article is necessarily of a general nature and should not be relied upon as legal advice.  If you require specific legal advice in respect of any legal issue, you should always engage a lawyer to provide that advice. 

____________________________

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

 

Recent Posts


Tags

Landlord Compensation Re Estate of Feron Resident Section 15A Amundson v Raos Psychological abuse Executors duty White v White Commercial Law Interest Rest Home Subsidies Ship Registration Part payment Ministry of Social Development Terms of Trade Albany Office Relationship Property Health and Safety Reform Bill Erceg v Erceg Offending Valid wills Subsidies Lankow v Rose De facto Fair share Family Trusts Privacy Act 1993 Blackwell v Hollings Vessel survey Lease Titles Repayment Asset Protection Validity of Wills Temper Personal Properties and Securities Act 1999 Re Estate of Campbell Gifts Testamentary capacity Unfair contract terms Domestic Violence Act 1995 Recovery of money Immigration Ilott v Mitson 2017 UKSC 17 Creating Trusts Vessel surveyor Civil union Financial products Limitation period Trusts Bill Vessel Sale and Purchase Verbal abuse Limitation defence Economic disadvantage KiwiSaver Wilson v Donnellan Estate Administration Mortgagee Lump sum Consumer credit contracts Business Wills Act 2007 Section 11 Trust Confidentiality Commercial Eviction Tenant Ministry Credit Contracts and Consumer Finance Act 2003 (CCCFA) Employment Claims against estates Partner of resident Deceased's wishes Grey Power Elder Law Will Beneficiary Rights Division of Functions WINZ Twelve years Loss of income Financial Advisers Act 2008 Companies Act 1993 Wills Act 2007 Section 8 Expression of interest Partnership based work visa Duress Principal Body Corporate Undue influence Maritime Law Violence Case Study Protection Order Reckless Trading Trust busting Ship's Mortgage Testamentary writing Living standards Residential Will that do Property Trustee Duties Six years Testamentary freedom Visa application Changes Wills Act 2007 Document Disclosure Property (Relationships) Act 1976 Shareholders' Agreement Acknowledgment of Debt Hawkes Bay Trustee Company Limited v Judd Immigration New Zealand Due Diligence Interpretation Act 1999 Section 29 Financial services provider (FSP) Tamarapa v Byerley Ship Domestic violence Litigation Financial services Protector Trusts Tenants Marriage Charities Family Protection Act 1955 Abuse Broadbent v Ministry of Social Development Physical abuse Section 15 Skilled migrant SMC Wills Limitation Act 1950 Auckland Office Constructive trusts Skilled migrant points Fair Trading Act 1986 ''Best Endeavours'' Pattern of offending Mortgagor Invalid wills SN v MN [2017] NZCA 289 Insurance Limitation Act 2010 Administrators duty Intellectual Property Maritime Lien Personal Contract Law Anti-money laundering (AML) Income Financial Markets Conduct Act 2013 (FMCA) Break up Contract and Commercial Law Act 2017 Wills Act 2007 Section 14 Section 182 Family Proceedings Act 1980 Zero Hour Contracts Frustration Company Law Clayton case Seperation Charity Murrell v Hamilton Gifting Acknowledgment Character requirements Charity begins at home Work and Income Interpretation of documents Trust Check Up Legislation update Sale of Goods Interpretation Act 1999 Mortgage Directors' Duties Commercial Property Testamentary Promises Resident Visa Lease

Archive