Endeavour Clauses: What's Best When Drafting An Agreement Or Contract?

Author:Mr John O'Riordan
Profession:Dillon Eustace
 
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  1. Introduction

    The terms "best endeavours", "reasonable

    endeavours" and "all reasonable endeavours" are

    commonly used by solicitors in the drafting of agreements and

    contracts. When making use of these terms, it is key to have an

    understanding of their precise meaning and to also be aware of

    the obligations their inclusion place on

    clients.1

  2. Best Endeavours

    The inclusion of the term best endeavours in a clause

    originally placed an onus on the obliged party to "broadly

    speaking, leave no stone unturned."2

    This very onerous obligation has been lessened somewhat over

    the years to allow for the concept of standards of

    reasonableness to be introduced into its meaning. What is now

    required is that a person must do "all that a reasonable

    person reasonably could do in the

    circumstances."3

    In other words, a party must take all steps in their power

    which "are capable of producing the desired

    result...", they must take all the steps a reasonable

    person "acting in their own interest and desiring to

    achieve that result would take."4

    An obligation to use best endeavours probably requires a

    party to take all the reasonable courses he/she can. They must

    act honestly, reasonably and make a positive effort to perform

    the relevant obligation.

    In the instance of a company the required standard is that

    of a "reasonable and prudent board of directors, acting

    properly in the interest of their company and applying their

    minds to their contractual obligations."5 In

    other words a company must do all that is reasonable in the

    circumstances.

    This obligation does not extend to a situation where a

    company should put itself at risk of financial ruin to fulfil

    its obligation.6 It does seem clear however that it

    should carry out such actions that are commercially practicable

    and incur any reasonable associated cost in order to fulfil its

    responsibilities.

    What amounts to best endeavours must be considered at the

    time of performance or breach of the undertaking and not at the

    time of the creation of the contract.7

  3. Reasonable Endeavours

    The obligations imposed by the term reasonable endeavours

    are "appreciably less than (those imposed by) best

    endeavours"8 and can be satisfied by an

    "honest try" by the obliged party.

    If a company can show any practical, financial or other

    commercial disadvantage in proceeding with the obligation this

    could justify their failure to take positive action, as could

    the likelihood or lack thereof of being successful. Any

    disadvantage to the...

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