Contract Clauses: Reasonable Endeavours

It is common to find a clause that requires the parties to take reasonable steps to perform one or more of their obligations. A reasonable endeavours clause is typically used where the parties do not wish to commit themselves to a specific course of action or where the facts and circumstances in which performance is likely to take place not fully known at the time of contract formation.

The most common phrases that are used include best endeavours, reasonable endeavours, or all reasonable commercial endeavours.

The courts will take a commercially astute approach and generally find that a best endeavours clause will require a party to all it reasonably can in the circumstances to achieve the contractual objective, but no more. This the measure of reasonableness will be determined according to an objective standard and a party is under no obligation to act against its own commercial interests.

So when determining what is reasonable a court may consider the nature, capacity, qualifications and obligations of the parties viewed in light of the particular contract.

When a reasonable endeavours clause is missing

Where a clause requires performance in a set manner, as opposed to on the basis of taking reasonable endeavours, performance will be measured according to the manner specified. In some circumstances, this is preferable as it removes the potential for disagreement about what is reasonable.

Drafting considerations

Before deciding to use a reasonable endeavours clause, the parties should consider whether they wish to allow such versatility in the performance of a particular contractual obligation. Where possible, the parties should specify how reasonable endeavours is to be measured i.e. which circumstances are to be taken into account when measuring whether a party has complied with such a clause.

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Connor James

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