What Is A Best Endeavours Clause? A Guide On Reasonable Endeavours and Best Endeavours

When it comes to commercial contracts, the use of best endeavours and reasonable endeavours clauses are common. These clauses refer to the level of effort and obligation required from parties to achieve the desired outcome of a contract.

An absolute obligation in a contract requires the party with the obligation to achieve the objective no matter what, while endeavour clauses provide a range of routes a party can take to reach the desired outcome, depending on the context.

However, the difference between best endeavours and reasonable endeavours is not always clear, and the obligation to take reasonable endeavours clause may require the party to take all reasonable courses of action available to fulfil the contract.

The concept of reasonableness still applies to both clauses, and care needs to be given to draft them as intended. Best endeavours means that a party is expected to sacrifice its own commercial interests to achieve the desired result, while reasonable endeavours require the party to consider their own commercial interests and do everything reasonably doable in the circumstances.

Depending on the context, the obligation on a party to achieve the desired objective may require the use of best endeavours to promote their commercial interest, even if it means sacrificing their own commercial interests to fulfil the obligation. The types of endeavours are varied, but best endeavours is considered to be the most onerous.

Understanding the nuances of best endeavours and reasonable endeavours clauses is essential, as breach of contract can occur if the level of obligation and effort expected is not fulfilled. Performing its obligations requires the party to take all steps that a prudent person with similar interests and desiring the result would take.

Key Takeaways

• The difference between best endeavours and reasonable endeavours in commercial contracts is not always clear.
• The level of obligation and effort required varies depending on the specific context of the contract.
• The use of best endeavours may require a party to sacrifice its own commercial interests to achieve the desired outcome.
• Careful consideration must be given to the drafting of the clauses, as breach of contract can occur if the level of obligation and effort expected is not fulfilled.
• The concept of reasonableness still applies to both clauses.

Understanding the Difference Between Best Endeavours and Reasonable Endeavours Clauses (Best Endeavours or Reasonable Endeavours)

When it comes to commercial contracts, the terms “best endeavours” and “reasonable endeavours” are commonly used. While they may seem interchangeable, they have different meanings and implications.

At its core, best endeavours is the more onerous of the two clauses. It requires a party to take all possible courses of action available to them to achieve the objective. This means that the party is required to sacrifice its own commercial interests in order to fulfil the obligation set out in the contract. On the other hand, reasonable endeavours only requires a party to take a reasonable course of action to achieve the desired result. This clause provides greater flexibility as it allows the party to consider their own commercial interests while fulfilling the contractual obligation.

It is important to note that the level of obligation may depend on the context in which the clause is used. For instance, a best endeavours clause may also mean that the party is required to use best endeavours to promote a product or service, which does not necessarily entail an absolute obligation. Likewise, a reasonable endeavours clause may require a party to use best endeavours to achieve a particular result, which would be more onerous than a standard reasonable endeavours clause.

Furthermore, a party with the obligation to use best endeavours is required to take all reasonable steps that a prudent person desiring the result would take. Conversely, a party with the obligation to use reasonable endeavours is only required to take one reasonable course of action.

It is also worth noting that the drafting of the clause may impact your business. For example, a clause that requires a party to sacrifice its own commercial interests may have significant implications that must be carefully considered.

In conclusion, the difference between best endeavours and reasonable endeavours in commercial contracts lies in the level of obligation and effort required from the party with the obligation. By understanding these clauses’ nuances, businesses can choose the appropriate obligation level to fulfil their contractual obligations and protect their commercial interests effectively.