Introduction
In commercial contracts it is common to come across clauses which require a party to use "best endeavours", "reasonable endeavours" or "all reasonable endeavours". It is not always clear what the difference between these interchangeable terms are, and even with a substantial body of case law dealing with these clauses there remains a certain level of uncertainty around interpreting them. This note sets out the factors that should be considered when drafting or reviewing such clauses.
Types
The three most common types of these clauses are best endeavours, reasonable endeavours and all reasonable endeavours. The courts have taken the approach that they can be classified as follows:
Recent case law
Even with the courts' attempt at ranking the clauses as above there remains a certain level of uncertainty around the requirements of an endeavours clause. In the recent case of Astor Management AG and another v Atlaya Mining plc and others ("Astor") where the requirements are unclear, the court may impose its own interpretation as to what is required. In most cases the courts will try to give legal effect to contractual provisions despite very-wide or open-ended language. An endeavours clause will only be deemed unenforceable if it, or part of it, is legally or practically impossible. This shows an increasing willingness to enforce contractual provisions where traditionally they may have been said to be void due to uncertainty.
Practical drafting tips
The level of contentious issues arising out of endeavours clauses means particular care should be taken to avoid uncertainty when drafting such clauses. Remember that whilst the three most commonly used endeavours clauses have acquired a certain prima facie meaning, it is important to note that each clause will be interpreted looking at the contract as a whole and the overall commercial context. If you can avoid uncertainty, aim to set out in the contract particular steps that the obligor is, or is not, expected to carry out to satisfy the particular endeavours obligation such as, whether an obligor must bear any costs or incur any expenditure in seeking to comply with the endeavours clause and, if so, how much.