Best or Reasonable Endeavours – Should We Care?

//Best or Reasonable Endeavours – Should We Care?

Best or Reasonable Endeavours – Should We Care?

contract-automation-bwI so frequently get asked this question that it has even made its way into my first book, Deal Makers. The question? “What’s the difference between best endeavours and reasonable endeavours, and since we’re asking, what the heck are ‘endeavours’ anyway?”

If you’ve been puzzling over this, hopefully this post will be helpful to you and you can share it with others!  

First of all, what are ‘endeavours’?

In normal English you would never say “I’ll endeavour to do such a thing”, you’d just say “I’ll do it”. If you’re less confident about your commitment, you might say “I’ll try”, or “I’ll do my best”.

In contract terms we use the word ‘endeavours’ when successfully achieving something is not entirely within our control.  It might be that we’ll endeavour to close a sale this quarter; however hard we try, we’ve no guarantee that it is going to close because although you know we can lead our dear customer to water, we can’t make them drink!

That’s one good example of a place where referring to ‘endeavours’ is useful and you will see it quite often with regard to completing tasks or achieving objectives within a particular timescale.  There are certain jobs in which, occasionally, obstacles come up that mean there is no way you can get it done in time, no matter how hard you work. In those circumstances you might say that you’ll endeavour to do it within those timescales but you can’t make any guarantees.

So, what about ‘best’ versus ‘reasonable’ endeavours?

People who are conscientious and hardworking, and want to make their customers happy (and I am sure that applies to you), will always want to do their best. This is one of the big areas of debate between salespeople and lawyers. When the salesperson says, “Well of course we’re going to do our best, why wouldn’t we give our ‘best endeavours’ that we’re going to meet the customer’s requirements?” the lawyer will be turning an attractive shade of purple and attempting to deliver a swift kick under the table.

Why is it such a big deal?  Well, ‘best endeavours’ really does mean you will do everything in your power to make the committed objective happen. If that means you need to get your Chief Engineer out of bed at 2 o’clock in the morning, or it means you have to bring in extra contractors and pay them overtime, so be it. In the case of Blackpool Airport in their UK dispute with start-up airline Jet2, a ‘best endeavours’ commitment meant that the airport had to extend its opening hours in order to meet its contractual obligations. As you can imagine, keeping an airport open for extra hours (think extra ground crew, security, lighting, heating, air traffic control for starters) is no trivial matter, and is going to cost a fair amount of money.

So a ‘best endeavours’ commitment means you are prepared to go above and beyond ‘normal good service’ and actually incur some level of financial pain to meet it.  Now you can see why your lawyer freaks out when you offer your ‘best endeavours’!  

What about ‘reasonable’ endeavours?

‘Reasonable’ is one of those terms that could be considered to be determined by the ‘eye of the beholder’ – one person’s ‘reasonable’ is someone else’s ‘entirely unreasonable’!

From a legal perspective, the courts will interpret ‘reasonable’ as meaning whatever would be commercially reasonable for a company like yours, providing the sorts of products and services that you provide, in a deal of this nature, in the current economic and commercial environment.  You wouldn’t usually be expected to do something that incurred financial loss for you under a ‘reasonable endeavours’ obligation – but you would be expected to do everything that a good supplier would do if it was trying to fulfil a contract.

As you can see, ‘reasonable endeavours’ is a much less onerous obligation than ‘best endeavours’. Generally speaking, a ‘reasonable endeavours’ commitment should be good enough for pretty much any contractual obligation that you might want to enter into.

Of course, if it really is essential that you (or the other party) will pull out all the stops to achieve a specified goal, consider whether ‘best endeavours’ will provide the confidence you need. You might consider specifying exactly what you mean by ‘best endeavours’, rather than leaving the question to the interpretation of the courts – so, for example, you might want to set out the actions a party will take to meet the obligation. These might include working weekends, hiring additional resources and paying overtime – but exclude purchasing additional equipment or premises.

Thinking through what you would realistically expect of yourself or the other party, and talking about it in practical terms rather than legal jargon, will help both of you to ensure that you don’t end up making ‘endeavours’ commitments that give your lawyer palpitations, or writing cheques your company is not willing or able to honour.

tiffany kemp devant

 

 

 

 

 

Tiffany Kemp
Founder and Managing Director, Devant

2017-02-19T13:49:49+00:00

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