It is common to find a reference to one party to a contract being
obliged to use her/his reasonable endeavours to do something. What does that
phrase mean and what are the alternatives?
1. The
commercial context of an endeavours obligation will always dictate what such a
provision actually requires of the party who agrees to it. Such issues are
commonly discussed in the Courts.
2. The
most onerous obligation is a “best endeavours” obligation. This has been held
to mean that the party concerned must do everything possible (and legal) to
fulfil the obligation. For that reason, it is best avoided when acting for the
party who is being asked to agree to such an obligation.
3. The
least onerous obligation is to use “reasonable endeavours”. This means that the
party must take reasonable steps to fulfil her/his obligation. Sitting back and
doing nothing is not enough. Each case will be assessed on its own facts and
circumstances. It is an underlying principle of the Scots common law that
parties to a contract are deemed to be obliged to act in such a manner as
furthers the objectives of the contractual relationship between them – and
certainly not act contrary to these terms.
4. A
common compromise is to seek an “all reasonable” or “all reasonable commercial”
endeavours obligation. These are variants on a theme which, by necessity, fall
between the two extremes.
5. The
message must be to think carefully about all such obligations which are asked
of you before agreeing to grant same.
