UK: Common Legal Terms - What They Really Mean

Last Updated: 24 March 2010
Article by Tom Coulson

Commercial contracts are frequently full of legal expressions and legal jargon, and although you may have encountered these terms numerous times and seen them in use for many years, there is often considerable misunderstanding as to the true effect of the terminology. This article discusses two such common terms and concepts used in commercial documents: 'reasonable/best endeavours' and the concept of 'negotiating in good faith', and sets out a brief explanation of their meaning and true legal effect.

Negotiation In 'Good Faith'

It is often the case that where commercial sales teams have successfully negotiated and agreed key provisions to their commercial contracts, there is pressure to have a signed agreement put in place right away, with the 'lesser' terms to be ironed out later down the line. The contract therefore goes on to state that the parties will negotiate these low priority terms in good faith in due course. What does this actually mean where parties agree to negotiate in good faith? What would be the consequences if one party simply refuses to negotiate and walks away?

The simple answer is that English law will not generally enforce a contract to make a contract or a contract to negotiate in good faith because the parties have not really agreed to anything at all. The term is too uncertain to be enforceable and there is no way a court could police such an 'agreement'. For example, the court cannot oblige one party to reach agreement with the other, nor would it be possible to determine when or in what circumstances the first party would be entitled to break off negotiations with the other. English law holds that the concept of a duty to carry on negotiations in good faith is inherently contrary to the adversarial position of the parties. Each party to the negotiations must be entitled to pursue his or her own interest (so long as he avoids making misrepresentations, fraud, duress, undue influence or illegality). To advance that interest each party must be entitled, if he thinks it appropriate, to threaten to withdraw from further negotiations or to withdraw in the hope that the opposite party may seek to reopen the negotiations by offering improved terms. English law therefore holds that a duty to negotiate in good faith is unworkable in practice and inherently inconsistent with the position of a negotiating party. It is unenforceable.

The English courts have declined to follow the example of some civil law jurisdictions such as Belgium, France, Germany and Italy in developing a general duty of good faith and fair dealing in the negotiation and performance of contracts. The duty to negotiate in good faith may involve obligations to disclose material information or not to break off negotiations without reasonable cause in circumstances where the other party reasonably anticipated that the contract would be signed. Other consequence of a duty of good faith may be that parties exchange information in a fair manner, agree to reasonable time limits for reflection and refrain from making manifestly unacceptable propositions. Therefore while English law will not enforce a contract to negotiate in good faith, particular care must be taken in international transactions. Be aware that in many European jurisdictions, you can be liable if you withdraw from the negotiations or fail to negotiate in good faith and local law advice should always be taken on international transactions before entering into any commercial documents.

Endeavours – What Is Best And What Is Reasonable?

Commercial contracts frequently contain clauses requiring one party to use 'best endeavours', 'reasonable endeavours' or even 'all reasonable endeavours' to effect a particular action or result. This wording is used to limit the parties contractual obligations – without the qualification, the obligation will amount to an unconditional undertaking that the objective will be achieved, regardless of how onerous it is. It is therefore common for obligations to be qualified by an endeavours clause. However despite the regularity in which these endeavours clauses are used – it is often not clear as to what is actually required from the obligor. For instance, to what extent should an obligor be expected to sacrifice its own commercial interests as a result of agreeing to perform to a specified standard?

It is clear from case law that there is a spectrum of endeavours clauses, with "best endeavours" representing the most stringent obligation and "reasonable endeavours" the least. Whilst the actual extent of the obligations will be inherently fact specific to the particular contract, the following features should be borne in mind as a useful distinction between a 'best endeavours', 'reasonable endeavours' or 'all reasonable endeavours' obligation.

Best Endeavours

Best endeavours is the most stringent type of endeavours clause. It is often mistakenly believed that a best endeavours clause is as good as an absolute obligation and requires the obligor to completely disregard its own commercial interests to achieve the required result. This is not the case and a best endeavours clause will allow the obligor some regard for its own commercial interests and certainly would not require action resulting in "the ruin of the company or the utter disregard for the interests of shareholders" (Terrell v Mabie Todd and Co. Ltd [1952]). Therefore the negotiating line often used to counter a best endeavours clause, "I'm not going to bankrupt my business", can be dismissed. It has in fact been held that there is an element of reasonableness within a best endeavours clause such that the obligor is only required "to take all those steps in its power which are capable of producing the desired results which a prudent, determined and reasonable obligor, acting in his own interests, would take" (IBM United Kingdom Ltd v Rockware Glass Ltd [1980]).

This is not to say that the obligor can simply have regard to its own financial interest, and disregard its obligations because they are financially unattractive. Whilst the obligor need not engage in any activity which would damage the company's goodwill or lead to its financial ruination, it will be required to take all reasonable steps to be taken to produce the result. There might be a whole number of reasonable courses which could be followed, and the obligation to use best endeavours will require the obligor to take all those reasonable courses that are open to it to achieve that aim. The extent any financial sacrifice is required in carrying out those steps may be a factor in determining whether it is reasonable or not.

Therefore an undertaking to use best endeavours is a promise not to be taken lightly, and is a stringent obligation that will be treated accordingly by the courts. It has also been held that an 'all reasonable endeavours' clause means the same thing as best endeavours.

Reasonable Endeavours

An obligation to use reasonable endeavours is less stringent than an obligation to use best endeavours. What actually constitutes reason - able endeavours will vary according to the circumstances of the case, but an obligation to use reasonable endeavours does not require a party to do anything that would involve sacrificing its own commercial interests (Yewbelle v London Green Developments [2006]). The obligor may therefore take into account any financial outlay that might be involved, and also the effect that taking certain steps will have upon its reputation and relationships with other parties.

Reasonableness is difficult to define and is inherently fact specific. Therefore there is always a degree of uncertainty as to what a reasonable endeavours clause may actually require in any given case. One way to address this uncertainty may be to set out particular steps that are to be taken as part of the reasonable endeavours. For example if some financial outlay is expected, the clause could set out the parameters for that outlay. Whilst this should not be an exhaustive list, the clause should set out the minimum steps required, making it clear that the specified steps do not otherwise limit the obligation.

A reasonable endeavours clause is therefore less stringent than that of best endeavours, but is certainly not toothless, particularly where certain minimum steps to comply with the clause are set out. Attention should therefore be paid to the remainder of the contract wording, before accepting to a reasonable endeavours clause, as the obligation may not always be as easy to satisfy as first appears.

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

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

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions