Malcolm ZoppiFri Oct 27 2023

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.

best endevours

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)

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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.

Achieving Success with Best Endeavours and Reasonable Endeavours

As discussed, best endeavours and reasonable endeavours are essential clauses in commercial contracts. When a party has an obligation to take certain actions, using best endeavours means that they must do everything reasonably possible to achieve the objective. On the other hand, reasonable endeavours require the party to take a reasonable course of action, which may not be as onerous as using best endeavours.

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The party with the obligation, therefore, must consider their own commercial interests and take all steps that a prudent person desiring the result would take. However, care needs to be given to ensure that the party does not have to sacrifice its own commercial interests to achieve the objective.

The concept of reasonableness still applies to both best endeavours and reasonable endeavours, and the obligation must be drafted as intended. Courts of appeal have consistently held that best endeavours means a party is expected to fulfil the obligation, even if it requires them to sacrifice their own commercial interests to achieve the desired outcome.

Therefore, it is crucial to adopt best endeavours or reasonable endeavours appropriately, considering the contractual obligations, interests and desiring the result, and the impact that the clause may have on your business. The chosen clause should be adopted as a compromise between the parties, where one party may have to sacrifice their commercial interests to achieve the desired outcome.

In conclusion, using best endeavours or reasonable endeavours appropriately can help you navigate legal requirements and protect your commercial interests effectively. Seek the advice of a commercial lawyer who can guide you through this process. By carefully considering the obligations and expectations associated with these clauses, you can ensure fulfilment of contractual obligations and the achievement of desired outcomes.

FAQ

What is the difference between best endeavours and reasonable endeavours in commercial contracts?

Best endeavours and reasonable endeavours are clauses commonly found in commercial contracts. The difference lies in the level of obligation and effort expected from the party with the obligation. Best endeavours requires the party to do everything within their power to achieve the objective, even if it means sacrificing their own commercial interests. On the other hand, reasonable endeavours allows for more flexibility, requiring the party to take a reasonable course of action based on the circumstances.

Does the level of obligation depend on the context of the contract?

Yes, the level of obligation associated with best endeavours and reasonable endeavours can vary depending on the context of the contract. The interpretation and application of these clauses may be influenced by factors such as the nature of the obligation, the commercial interests at stake, and the desired outcome. It is important to carefully consider the specific circumstances and the intentions of the parties when determining the appropriate level of obligation.

Can a party be required to sacrifice their own commercial interests to fulfil a best endeavours obligation?

Yes, when a party has agreed to a best endeavours clause, they may be required to sacrifice their own commercial interests in order to fulfil the obligation. Best endeavours means that the party must do everything within their power, even if it is not in their immediate commercial interest, to achieve the desired results. This level of obligation is considered the most onerous and may impact the party’s business decisions and strategies.

Is reasonable endeavours a more flexible alternative to best endeavours?

Yes, reasonable endeavours provides more flexibility compared to best endeavours. With reasonable endeavours, the party is required to take a reasonable course of action based on the circumstances, considering their own commercial interests. It is often seen as a compromise between the strict obligations of best endeavours and the freedom to pursue the party’s own interests. Reasonable endeavours allow for some discretion in determining the appropriate actions to fulfil the obligation.

When should I use best endeavours and when should I use reasonable endeavours?

The choice between best endeavours and reasonable endeavours depends on the specific circumstances and the desired outcomes of the contract. Best endeavours should be used when the obligation requires the party to go above and beyond, potentially sacrificing their own commercial interests to achieve the objective. Reasonable endeavours, on the other hand, is appropriate when some flexibility is desired, allowing the party to consider their own commercial interests while fulfilling the obligation. Careful consideration must be given to the context and objectives of the contract to determine the most suitable choice.

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Disclaimer: This document has been prepared for informational purposes only and should not be construed as legal or financial advice. You should always seek independent professional advice and not rely on the content of this document as every individual circumstance is unique. Additionally, this document is not intended to prejudge the legal, financial or tax position of any person.

Disclaimer: This document has been prepared for informational purposes only and should not be construed as legal or financial advice. You should always seek independent professional advice and not rely on the content of this document as every individual circumstance is unique. Additionally, this document is not intended to prejudge the legal, financial or tax position of any person.

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