The Obligation to try (harder)…
by James Severn & Catriona Boyd
It is common for a party to a contract to agree to try – or “use endeavours” – to fulfil an obligation, rather than committing absolutely to make something happen. But how hard do they have to try? There are a number of popular formulations, on which the courts have given guidance:
• Reasonable Endeavours
The most recent judicial view1 is that the test is an objective one, and the question to be asked is “what a reasonable and prudent person acting properly in their own commercial interest and applying their minds to their contractual obligation would have done”.
It was noted that the party alleging a breach of the obligation must be able to identify a specific failure on the part of the other party. In assessing what is reasonable, the Court will consider whether such steps would have been successful; it is most unlikely to be a breach of the obligation if taking the steps proposed would have made no material difference to the outcome.
• Best Endeavours
This is recognised as a much more onerous provision than the use of reasonable endeavours. To comply with this requirement, a person must do all that he reasonably could do. In practice, this means that he would not be expected to bankrupt his business but he may be expected to incur costs in order to satisfy his obligation.
• All Reasonable Endeavours
The Court has said2 that “all reasonable endeavours” is “probably a middle position somewhere between” reasonable endeavours and best endeavours. However, this can lead to uncertainty, in particular as to whether it requires multiple steps to be taken and the extent to which a person must compromise his own commercial interests in order to comply.
Despite the volume of litigation, and therefore guidance from the Courts, there is still uncertainty as to how the tests will be applied in particular circumstances. So, parties should ensure that endeavours clauses are used only relation to clearly identifiable obligations, and it may also be advisable to set out the specific steps that are to be taken to achieve those obligations.
If you have any queries about this article, please contact James Severn, whose details appear below.
1 Minerva (Wandsworth) Ltd v Greenland Ram (London) Ltd  EWHC 1457(ch)
2 UBH (Mechanical Services) Ltd v Standard Life Assurance Company, The Times, 13 November 1986