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Obligations Best or reasonable endeavours are commonly used in commercial contracts, but how should parties deal with them? By Helen McKinLay-Smith
In the world of commercial contracts, obligations to use "best "or "reasonable" endeavours are commonplace. Parties use thum in order to quality what would otherwise be absolute obligations to achieve specified objections. So far, so good: an endeavours obligation requires less than an absolute obligation.
How, though, does a party satisfy an obligation to use best or reasonable endeavours? Introduce the obligation to use "all reasonable" endeavours - and numerous other variants - and parties are faced with a range of obligations that are difficult to interpret in the light of conflicting case law.
Best and reasonable endeavours
In IBM United Kingdom Ltd v Rockware Glass Ltd [1980] FSR 335, the Court of Appeal considered that a promisor's obligation to use best endeavours meant that it had to do "all it reasonably can" to obtain the desired result. The onerous nature of the obligation had been established in Sheffield District Railway Co v Great Central Railway Co (1911) 27 TLR-451, in which it was stated that such an obligation meant "to leave no stone unturned".
Thus, the threshold is widely aeeepted us being high, Terrell v Mabie Todd & Co Ltd [1952] 2 TLR 574 provides the meaning: "To do what ean reasonably be done in the eireunislanees. The standard of reasonableness is that of'a reasonable and prudent board of directors acting properly in the interests of t heir company." In Pips (Leisure Productions) Ltd v Walton (1982) 43 P&CR 415,...