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Contracting parties will often try to limit or qualify the
extent of their obligation by making it subject to "reasonable
endeavours", "all reasonable endeavours" or
"best endeavours". Absent such wording, performance of
the obligation will be absolute and any failure to achieve the
intended objective will result in a breach of contract.
What each of these three phrases means in practice, and the
extent to which they can limit an obligation, has long been
considered by the courts – most recently by the Court of
Appeal in the case of Jet2.com Limited v Blackpool Airport
Limited.
This latest decision underlines the critical importance of
drafting clear and sufficiently specified objective criteria upon
which to assess whether a party's endeavours were in fact
adequate, to ensure the commitment is to be legally
enforceable.
In this case, the Court of Appeal considered a dispute between
Jet2.com and Blackpool Airport over the legal effect of clauses
requiring the exercise of "best" and "all
reasonable" endeavours.
Both parties were to cooperate together and use their best
endeavours to promote Jet2.com's low cost services. Blackpool
Airport was also required to use all reasonable endeavours to
provide a cost base that would facilitate Jet2.com's low cost
pricing.
Key points:
Courts will generally be minded to hold an obligation to use
best endeavours as enforceable – unless the purpose
intended to be achieved by the endeavours is too vague or no
criteria has been provided to allow for the assessment of whether
best endeavours have been or can be used.
Agreeing to use best endeavours in the performance of an
obligation is an admission by that party that it may well incur a
financial cost in doing so – an undertaking to perform
cannot be avoided simply because it becomes contrary to their
commercial interests to do so.
The extent to which a party, who has undertaken to use best
endeavours, will be required to act against its own financial
interests will depend on the nature and terms of the contract in
question.
Comment
This case serves as an important reminder to those drafting
contracts – ensure that obligations, and the steps
required to be taken to satisfy those obligations, are drafted in a
sufficiently clear manner to ensure certainty and avoid costly
disputes over the precise extent of those obligations.
A final point of note is that in the particular circumstances of
the case it was agreed that "best endeavours" and
"all reasonable endeavours" were intended to mean the
same thing. But drafters take note – this is not
necessarily always the case and the meaning of each phrase will
very much depend on the context in which they are used.
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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