UK: Further Guidance On "All Reasonable Endeavours"

Last Updated: 20 July 2011
Article by Mark Alsop

JET2.com Limited v Blackpool Airport Limited [2011] EWHC 1529 (Comm)

JET2 is a low cost airline which entered into an agreement with Blackpool Airport in 2005 for flights to and from the airport. The key wording in a simple agreement was: "JET2.com and BAL will co-operate together and use their best endeavours to promote JET2.com's low cost services from Blackpool Airport and BAL will use all reasonable endeavours to provide a cost base that will facilitate JET2.com's low cost pricing." Blackpool Airport had certain published operating hours, but there were not mentioned in the agreement. The case turned on the extent to which JET2 could insist on flying at times outside those operating hours. For some years, it had been scheduling flights outside hours, but new owners of Blackpool Airport told Jet2 in October 2010 that it would no longer accept flights outside hours. The problem for Blackpool Airport was that keeping the airport open for JET2's early and late flights was uneconomic. JET2's argument was that it is essential for a low cost airline to have as many flights as possible a day, particularly for aircraft based at the airport. The arguments turned on construction of the key wording quoted above, and in particular the meaning of "promote" and "all reasonable endeavours".

The High Court (His Honour Judge Mackie QC) found in favour of JET2.

  • "Promote" in such an important clause could not be restricted to the limited marketing and advertising sense – and anyway marketing and advertising was covered by a subsequent clause.
  • "All reasonable endeavours to provide a cost base that would facilitate JET2's low cost pricing" should be interpreted as an obligation to provide facilities and services that would bring about the low cost pricing.
  • The absence of an express provision as to opening hours suggested that it was "too obvious to mention" that JET2, like its competitors at Blackpool, would not be confined to normal operating hours.
  • The Judge reviewed the cases on all reasonable endeavours (which was accepted by the parties as being the same thing as best endeavours). He made the point that the meaning is a question of construction in each case and not a matter of extrapolation from other cases. He distinguished other cases on the grounds that the words were not used in the context of leaving open for later negotiation an aspect of an otherwise explicit commitment (Phillips Petroleum case) or obtaining consent from a third party (Yewbelle case). Where there is an obligation to use all reasonable endeavours to obtain something from a third party, it is established that sacrifice of one's own commercial interests is not required.
  • It cannot have been intended that Blackpool Airport should be able to pick and choose what to do in the light of what suits it. It had been losing money since the start and its profitability will have been affected by all sorts of considerations such as its overall efficiency and the decisions which it had taken about other airlines at Blackpool. These were all risks which one would assume Blackpool Airport alone to bear in a commercial contract. It was improbable the parties would have used an expression in the agreement to mean that one of them could limit or abandon performance once it became commercially undesirable or unprofitable.
  • Nonetheless, the Judge did accept that the words "all reasonable endeavours" must impose a lesser obligation than an absolute commitment to provide longer hours throughout a 15 year period. However, because the exercise of determining whether best endeavours is highly fact specific, he refused to say precisely how many hours the airport had to be open in the future. Indeed, he put it that as a result of changes in circumstances: "this case may prove to be little more than a practice run for the next one".

The key point in the decision is that a party under an obligation to use all reasonable endeavours cannot necessarily use cost or inconvenience as a grounds for not doing something where performance is under its control and does not depend on cooperation from a third party.

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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