A contract will often impose an obligation on a party to use best endeavours or reasonable endeavours in relation to some act or thing eg. an obligation to "obtain finance".
Since parties typically want to minimise their obligations under contract, arguments often arise about whether an obligation to use "best endeavours" or "reasonable endeavours" should be imposed.
So what exactly is the difference?
Waters Lane case
Until the Waters Lane1case, the courts had not specifically commented on whether there was any difference between "reasonable endeavours" and "best endeavours".
1.1 The Facts
The Sweeneys were owners of 200ha property near Campbelltown. Waters Lane was a developer who wanted to rezone and develop the property for residential uses and to construct a retirement village.
Under the Heads of Agreement entered into between the parties, an obligation was imposed on Waters Lane to use "all reasonable endeavours" to have the property rezoned and a development consent granted by 9 March 2006 (the Sunset Date).
For commercial reasons, Waters Lane took a "softly softly" approach when applying to Council for rezoning of the property and the development consent.
The Sweeneys became concerned that Waters Lane would not meet the Sunset Date and threatened to terminate the agreement. Waters Lane responded by bringing proceedings in the Supreme Court of NSW to restrain the Sweeneys from terminating the Agreement.
The Supreme Court of NSW found in favour of the Sweeneys.
Waters Lane appealed to the NSW Court of Appeal.
1.2 The Decision
Waters Lane was unsuccessful in its appeal.
The Court held that the "softly softly" approach, although commercially prudent, was inconsistent with Waters Lane's obligation to use "all reasonable endeavours" by the Sunset Date.
In considering the meaning of "all reasonable endeavours", Justice Tobias upheld the view that "best endeavours" requires a person to do "all he reasonably can in the circumstances to achieve the contractual object, but no more". Justice Tobias continued on to say "if this means that there is no relevant difference between the standard constituted by the expression 'all reasonable endeavours' and that constituted by the expression 'best endeavours' then so be it".
So What Does This Mean - The Lesson From The Waters Lane Case
The Waters Lane case suggests that, at least in NSW, there is little or no difference between the obligation to use "best endeavours" and "all reasonable endeavours".
1 Waters Lane and Anor v Sweeney and Ors  NSWCA 200
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