Reasonable Endeavours - What Do They Really Mean in Contracts?


An absolute obligation in a contract means what it says - if you fail to do something you are in breach of contract. Sometimes parties seek to restrict their obligations by saying that they will "try" to do something. This is particularly the case if the obligation involves a third party as you cannot ensure they will do something, for example, to provide a collateral warranty. This sort of obligation is often
expressed as a party using “endeavours” to achieve the result.

There are three typical endeavours clauses: best endeavours, reasonable endeavours and all reasonable endeavours. What are you committing to in signing up to any one of them?

It is accepted that the most onerous obligation is to use best endeavours. If you have signed up to an obligation to use best endeavours, then you are required to exhaust all reasonable courses of action available to you (although you would not be expected to bankrupt yourself).

Much of the debate has centred on what is meant by reasonable endeavours and whether there is any difference between it and using all reasonable endeavours.

If you have agreed to use reasonable endeavours, then you need to show that you have taken one reasonable course of action; it may require you to spend some money but you are not required to sacrifice your commercial interests.
If you have agreed to use all reasonable endeavours, then you are expected to explore all avenues reasonably open to you.

So how is this different to just plain reasonable endeavours? In a recent Scottish decision, EDI Central v NCP Limitedall reasonable best, the judge said he found it hard to draw any distinction between and. However he gave some assistance to those toiling away trying to get a result through reasonable or all reasonable endeavours.

He said that if it became clear that a party could not achieve something regardless of what further steps it may take, it need not waste any further time or money. However the Court said a party could not sit back and say that it could not reasonably have done more without communicating this to the other party as it might lead to some alternative solution.

So how can you protect yourself with an endeavours obligation?

1. If the contract includes any stipulations as to how you should go about fulfilling an obligation, you must comply with those.
2. It is sensible to keep records of what you have done; choices you have made to demonstrate that you have explored all reasonable courses of action.
3. If you feel you are engaging in fruitless efforts to achieve an impossible result think carefully about whether to continue.
If in doubt advise/share the steps you are taking and the problems you are experiencing with the other party, asking if they have any other suggestions.
It may be a fine line between complying with the endeavours obligation and it not prejudicing your commercial interests - with best endeavours you may have no option.