Reasonable endeavours: an update
By Suzanne Hooks
Contract drafting will often reflect the commercial reality that the requirement to perform certain obligations cannot be absolute. It is for this reason you will often see these obligations qualified so the performer has to use ‘reasonable’ or ‘best’ endeavours.
The meaning of these phrases has developed through case law over the years, and guidance setting out their current respective interpretations is below. The distinction between them was summarised in Rhodia International Holdings Ltd v Huntsman International LLC (2007), where Mr Flaux QC said ‘an obligation to use reasonable endeavours to achieve the aim probably only requires a party to take one reasonable course, not all of them, whereas an obligation to use best endeavours probably requires a party to take all the reasonable courses he can’.
Although an obligation to use best endeavours may require expenditure on the part of the performer to achieve the desired result, it may not be required to go so far as to cause itself financial ruin or to go against the interest of the shareholders…
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