In practice, best or reasonable endeavours obligations are less onerous than you might expect. Although there is an understandable temptation to agree to best or reasonable endeavours obligations in order to reach agreement on contract terms more quickly, this requires careful thought. In many cases, even a party’s "best" endeavours may not be good enough.

An IT contract may, for example, require the supplier to use its "best endeavours" to complete a project by a particular date, or its "reasonable endeavours" to obtain appropriate licence rights. But what does this actually mean in practice?

The terms "best endeavours" and "reasonable endeavours" do not have any clear meaning, but the relevant cases give a flavour of what may be required to comply with these obligations:

  • Best endeavours is a much lower standard than an absolute obligation, and reasonable endeavours is, in turn, appreciably less than best endeavours. However, neither best endeavours nor reasonable endeavours requires a party to do something that would be unreasonable.
  • Best endeavours has been described as imposing an obligation for a party to do what it reasonably can in the circumstances. It does not oblige a company to take any action that is clearly not in the best interests of the company (Terrell v Mabie Todd (1952); Rackham v Peek (1990)).
  • A party who agrees to use reasonable endeavours has a greater opportunity to take into account his own interests than a party who must use best endeavours:

- Although a best endeavours obligation does not require a party to do something that would be unreasonable, short of that, what is required to comply with a best endeavours obligation will be measured by reference to what a prudent, determined and reasonable person would do if the relevant objective was in his own interests and he was anxious to achieve it (IBM v Rockware Glass (1980)).

- In contrast, a party who agrees to use reasonable endeavours is entitled to perform a balancing exercise and to weigh up that contractual commitment against all relevant practical, commercial and financial considerations, such as the costs associated with taking the required action, any practical disadvantages, and the likelihood of achieving the required outcome (UBH v Standard Life (1986)).

  • An obligation to use "all reasonable endeavours" is probably a middle position, implying something more than reasonable endeavours but less than best endeavours.

Practical tips

Best or reasonable endeavours obligations are less onerous than you might expect. If it is important to achieve a particular outcome, the parties should consider including an absolute obligation instead, so that failure to achieve it for whatever reason is likely to lead to a breach of contract (unless the contract is frustrated or there is an applicable contractual exemption).

If a best or reasonable endeavours obligation is to be included in the contract, the parties should bear in mind that these terms do not have any clear meaning, and they may have very different ideas of what should, or should not, justify a failure to achieve the relevant outcome. To reduce the potential for misunderstanding, the parties should consider what types of commercial factor should be taken into account, and deal with these issues expressly: for example "X will use its best endeavours (but without being required to incur any material financial cost)..."

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.