• news-banner

    Expert Insights

Top 10 Tips: Using Best, All and Reasonable Endeavours

In the recent case of Brooke Homes (Bicester) Ltd v Portfolio Property Partners Ltd [2021] EWHC 3015 (Ch), Brooke Homes (“the Claimant”) successfully brought a £500 million+ breach of contract claim against the P3 Group (“the Defendant”) for failing to use all reasonable endeavours to enter into a final binding sale agreement, as agreed in heads of terms.  Endeavours clauses are used when a party is obliged to try to fulfil an obligation rather than satisfy it absolutely.  It is clear from cases such as the Brooke Homes case that there are differing degrees of effort required depending on the wording used, whether ‘best’, ‘all’ or ‘reasonable’.

1. Endeavours obligations can bring rise to a claim, even if contained in Heads of Terms

The heads of terms in the Brooke Homes case contained an obligation to use “all reasonable endeavours to enter into a final binding Agreement which captures legally these Heads of Agreement acting in good faith towards each other.” Although the judge did not find there was a binding contract of sale, the judge did find that the Defendant’s failure to conclude the conditional sale contract over a two year period amounted to a failure to use all reasonable endeavours and act in good faith. On this basis the Defendant was found to be in breach of contract.  The case reiterates the importance of Heads of Terms being ‘subject to contract’ unless expressly agreed otherwise. The courts seem, from this case, otherwise keen to enforce the parties’ intentions. 

2. Make sure there is an active endeavour

As highlighted in the Brooke Homes case, the Claimant was concerned about the defendant’s “non-action”. The Defendant had failed to provide plans and agree a mechanism for identifying the land that might be sold, thereby preventing the conclusion of the sale agreement. The judgement notes that “active endeavour is required on the part of the parties where all reasonable endeavours are required: passivity or inactivity is likely to be construed as a potential breach”. The Defendant’s failure to act amounted to breach of its obligation to act with all reasonable endeavours.

3. The meaning of ‘reasonable endeavours’

Reasonable endeavours are less burdensome than the alternative ‘best’ or ‘all reasonable’ endeavours. Using reasonable endeavours has been said to be a question of what a reasonable and prudent person acting properly in their own commercial interest would have done to try to achieve the objective.  Although less stringent, combined with a clear objective it is capable of being an enforceable obligation despite the limitations that only one reasonable course of action is required.

4. The meaning of ‘all reasonable endeavours’

Using all reasonable endeavours is a higher level of obligation, requiring taking all reasonable paths although to a lesser degree than ‘best’ endeavours.   The judge in the Brooke Homes case considered the meaning of ‘all reasonable endeavours’ and concluded that active endeavour is required.  If a party identifies a reasonable course then the other party should take that course or explain why it has not.  The Brooke Homes case noted that a precise requirement to discharge obligations will depend on the precise wording and context in which that wording arises, so even with an “all reasonable endeavours” clause, some subordination of commercial interests may be required.

5. The meaning of ‘best endeavours’

Best endeavours may require a party to sacrifice some of its commercial interests in order to carry out a contractual obligation.  The words do not mean ‘second-best endeavours’ and may require expenditure be incurred or involve an obligation to litigate or appeal.  It is not an absolute obligation but it is the next best thing.

6. Other variations

There are other variations such as “commercially reasonable endeavours” and “reasonable commercial endeavours”. However, it is not clear whether the courts would differentiate between the terms given that a reasonable endeavours obligation already involves considering all relevant commercial factors.

7. Information and Co-operation

An endeavours obligation may include an obligation to notify the other party if it encounters difficulties in achieving the objective.

8. Certainty

Consider whether the endeavours clause is enforceable.  An endeavours obligation will likely fail if the underlying objective is unenforceable due to uncertainty. Ensure that endeavours obligation are combined with clearly defined objectives.

9. What steps must be taken to achieve the obligation?

Set out the requirements expressly. Should costs be incurred and how much?  How long should they endeavour?  What happens if timescales are not met, does the obligation lapse, continue, or downgrades itself over time it not achieved? What are the notice requirements and is there a requirement to litigate or appeal?

10. What steps do not have to be taken?

What is not expected to be carried out? Be clear as to the differing levels of obligation imposed.  Record evidence of efforts and keep parties informed.

To avoid uncertainties as to what an endeavours clause may require in any given case, this is best dealt with expressly in contract drafting.  Parties should agree the specific obligations and actions each must take, are not required to take and what happens when timings are not met.

Our thinking

  • In-House Insights: Legal operations at work - how to do more with less

    Megan Paul

    Events

  • Syma Spanjers and Francesca Heath-Clarke write for People Management on tackling discrimination against young female workers

    Syma Spanjers

    In the Press

  • HR magazine quotes Isobel Goodman on second jobs and HR obligations

    Isobel Goodman

    In the Press

  • Cy-près engaged to revive the “spirit” of the long-forgotten “English Method”

    Jennifer Doggett

    Insights

  • Property Week quotes Lauren Fraser on the Supreme Court case of A1 Properties v Tudor Studios RTM

    In the Press

  • UK Government AI Regulation Response & Roadmap – Is the Government behind the wheel?

    Mark Bailey

    Insights

  • Noni Garratt-Wall takes part in interviews on our Firm's rebrand and marketing strategy

    In the Press

  • The Daily Telegraph quotes Nick Hurley on the surge of unexplained absences in the workplace

    Nick Hurley

    In the Press

  • Remote Hearings – factors to consider

    Richard Kiddell

    Insights

  • IR35 update: HMRC consultation on proposed mechanism for off-setting tax liabilities

    Hugh Gunson

    Insights

  • Richard Davies writes for City AM on the lessons that the Premier League can learn from the Super Bowl and NFL

    Richard Davies

    In the Press

  • “Lead Linings Playbook” – A relationship and divorce involving Narcissistic Personality Disorder

    Charlotte Posnansky

    Insights

  • The Evening Standard quotes Kelvin Tanner on the rush to complete Skilled Worker visa applications

    Kelvin Tanner

    In the Press

  • Sophie Rothwell writes for Law 360 on the Bullying and Respect at Work Bill

    Sophie Rothwell

    In the Press

  • Property Week quotes Samuel Lear on the Renter’s Reform Bill

    Samuel Lear

    In the Press

  • Charles Russell Speechlys advises Entrepreneurial Food Group on the sale of two food production businesses to The Compleat Food Group

    Hamish Perry

    News

  • The Global Legal Post quotes Mike Barrington on Tesco’s decision to sell its banking practice

    Mike Barrington

    In the Press

  • David Savage writes for Property Week on the case of Triathlon Homes vs Stratford Village Development Partnership and Get Living

    David Savage

    In the Press

  • Community Infrastructure Levy and common pitfalls

    Sadie Pitman

    Insights

  • UK tax considerations for US persons relocating to the UK

    Matthew Radcliffe

    Insights

Back to top