Ireland: Contracting Conundrums – What Are You Endeavouring To Do?

Contractual obligations such as you “shall” or “will” do something are absolute with the result that a failure to satisfy the obligation is a breach of contract. In order to mitigate this, the parties will frequently qualify an obligation to agree a “middle ground” by stating that a party must only use its best endeavours, or other variations like reasonable endeavours or all reasonable endeavours.

This helps progress negotiations, but introduces uncertainty into a contract.  This is because it is not always clear what lengths a party must go to comply with an endeavours obligation.

We’ve set out some tips below to help you better understand the difference between some of the main formulations used.  It is important to remember, though, that any contractual provision will always be construed on its own terms and contractual and factual matrix.  The duty to be performed must also be gauged by reference to the facts available to a party at the time of performance. This means that the same expression does not always mean the same thing!

For ease of reading, references below to the “supplier” mean the person who is under an obligation to do something, whilst references to the “customer” mean the person owed the obligation.

1. Best endeavours

This represents the most onerous endeavours type obligation, with a similar variation being “ultimate endeavours”.

A best endeavours obligation was historically interpreted to mean that a supplier would leave no stone unturned when attempting to comply with its obligations under a contract.  More recently, the UK Courts have found best endeavours to mean a supplier must take:

“all those steps in their power which are capable of producing the desired results… being steps which a prudent, determined and reasonable [customer], acting in his own interests, and desiring to achieve that result, would take”.

(IMB United Kingdom Limited v Rockware Glass Ltd).

This is a high threshold, particularly as you look at what a customer, acting in its own interest, would do to achieve the desired result, rather than what the supplier, who is subject to the obligation, would do.  Needless to say, a customer is likely to do more than the supplier would and this limits the extent to which a supplier can have regard to its own personal circumstances and interests in deciding what it must do. However, the reference to a “reasonable” person shows that it is not an absolute obligation.

A best endeavours obligation probably requires a supplier to take all the reasonable courses of action it can, not just one or more courses of action.

The English Courts in Jet2.com v Blackpool Airport Limited extended what a ‘best endeavours’ obligation can mean to include an obligation on the supplier to sacrifice its commercial interests. This can include some level of financial hardship, though it probably does not extend to complete disregard for the company’s financial interests (Terrell v Mabie Todd and Co. Limited). This is important as people often claim in negotiations that a best endeavours obligation could result in their financial ruin – that’s probably an overstatement but it can still involve significant expenditure so should be agreed to with caution.

A best endeavours obligation has been held to require a person to litigate or appeal a decision.

2. All reasonable endeavours

This is a murky middle-ground. It is a compromise between the extremes of ‘best endeavours’ and ‘reasonable endeavours’ clauses and has elements of both.

It is generally thought that a supplier using ‘all reasonable’ endeavours must explore all avenues reasonably open to it, including where this involves expenditure.

An important question is whether the supplier can have regard to its personal circumstances in determining the steps it will take to comply with the obligation or, instead, should it be looked at from the customer’s perspective.  The case law is inconsistent in this regard.  It can’t be ruled out that the supplier may have to sacrifice its commercial interests at least to some extent, though it is probably entitled to have greater regard to its own commercial interests than in the case of a “best endeavours” obligation.  Given the uncertainty, if it’s an important clause, it’s best to make clear from whose perspective it is looked at.

3. Reasonable Endeavours

This type of endeavours clause imposes the lowest level of obligation on a supplier.

The leading English case of Rhodia v Huntsman suggests that you only have to take a single course of action to achieve a particular aim to satisfy this obligation. What is more, it appears that the supplier can have primary regard to its personal circumstances and interests in deciding what it must do.  Whilst it may require limited expenditure, the supplier is not required to sacrifice its commercial interests (P&O Property Holdings Limited v Norwich Union Life Insurance Society).  In one case, the Court considered that the “chances of achieving the desired result” would be of prime importance (UBH (Mechanical Services) Ltd v Standard Life Assurance Company), which suggests that if a positive outcome is unlikely, you don’t have to take that course of action. 

However, it still requires you to take certain action and is not toothless.

4. Drafting Tips

Courts will always try to interpret a contract by reference to what the parties intended. Therefore, the starting point for interpretation will be reading what the terms of the contract actually say.

In order for an endeavours clause to avoid being void for uncertainty, you should ensure that endeavours clauses are as specific as possible regarding:

  • the objective to be achieved; and
  • what must be done to achieve it.

If you want to make clear what a particular variation means, you can always define it.  A common trick is to define a variation in a way that is different to what it would normally mean.  For instance, a supplier may define “best endeavours” in a way more akin to “all reasonable endeavours” whilst a customer may likewise define a “reasonable endeavours” obligation more stringently.

In a more heavily negotiated contract, that tactic is unlikely to work and introducing a global definition may be more work than its worth.  An alternative is to provide more certainty in a specific clause as to the minimum steps or maximum expenditure etc. to be taken to comply with the obligation where this is important.

Some things to think of when setting out what fulfils an endeavours clause include:

  • Should the supplier bear the costs of complying with the obligation? 
  • Is there a cap on those costs?
  • For how long must the supplier pursue the objective?
  • Does the supplier need to keep the customer updated with its progress?
  • In deciding what steps must be taken, can the supplier have regard to its own personal circumstances and interests or must it act in the interests of the customer’s perspective.
  • Is there anything the supplier does not have to do?

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.