The decision in the NSW Supreme Court - Court of Appeal,
Foster v Hall  NSWCA 122, provides guidance on how
the courts will interpret a contractual condition to use
"best reasonable endeavours".
The case concerned a contract of sale of rural land at Mount
Kembla where both parties agreed to use "best reasonable
endeavours" to have a proposed plan of subdivision of the
land registered within 12 months of the contract date.
Registration of the plan did not occur within that period of 12
months and, as a result, the vendors purported to rescind the
The purchasers maintained the vendors were not entitled to
rescind, as they had not used their "best reasonable
endeavours" to have the plan of subdivision registered.
The purchasers treated the purported rescission by the vendors as a
repudiation of the contract and the purchasers then terminated the
As a precondition to registration of the plan of subdivision,
the vendors were required to comply with certain conditions
contained in the local Council's development consent.
The vendors argued that one of the conditions in the development
consent, relating to the gradient of an access way for the
property, was physically impossible to achieve and pointless, and
on that basis, argued that they did not breach the obligation to
use "best reasonable endeavours" in allowing the
development consent to lapse.
The Court of Appeal, in interpreting the use of the phrase
"best reasonable endeavours", observed that the
inclusion of the word "best" raised the standard higher
than that required by an obligation to use "reasonable
endeavours". The Court then equated an obligation to use
"best reasonable endeavours" with an obligation
to use "best endeavours".
The Court also considered relevant case law and concluded that
an obligation to use "best endeavours" is governed by
what is reasonable and prudent in the circumstances, recognising
that the relevant party is also acting in its own interest.
Having regard to the development consent condition, the Court
decided that the vendors were capable of complying with that
condition by seeking an amendment to the condition. Further, the
Court held that while the exercise of "best reasonable
endeavours" will not always require a party to seek an
amendment to a development consent condition, given the
Council's demonstrated willingness to consider a requested
amendment, the vendors' failure to request an amendment was in
breach of their obligation to use "best reasonable
Lessons to be learned
When negotiating and drafting standards of qualifications to be
applied to a contractual obligation, always be very clear on what
level of obligation you are willing to undertake or accept and
ensure the wording in the contract reflects that level of
Where possible, be specific about any obligations that are
excluded or included.
For example, if the vendors in this case had included a
condition in the contract allowing them to rescind the contract if
any development consent provision was unacceptable to them, this
may have overcome the difficulty in rescinding which they
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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