Litigation update: High Court updates ‘reasonable endeavours’ — commercial interests vs an obligation owed

In Electricity Generation Corporation v Woodside Energy Ltd; Woodside Energy Ltd v Electricity Generation Corporation [2014] HCA 7 (5 March 2014), the High Court has, by a 4:1 majority, held that Woodside Energy and other gas suppliers in Western Australia (the sellers) did not breach their obligation under a gas supply agreement to use ‘reasonable endeavours’ to make additional quantities of gas available to the Electricity Generation Corporation t/as Verve Energy.

The court has reaffirmed its approach to the interpretation of commercial contracts that such contracts should be given a business-like interpretation on the assumption that parties intended to produce a commercial result.

Viewed in this light, contractual obligations framed in terms of ‘reasonable endeavours’ do not oblige a party to forego or sacrifice their business interests…

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