Court considers "all reasonable endeavours"

Those of you that negotiate contracts may find useful a recent Chancery Division decision, Hiscox v Pinnacle. One of the points considered in the case was the meaning of the certain standard of performance wording that often features in contracts:

• best endeavours
• all reasonable endeavours
• reasonable endeavours

This case doesn't appear to have been reported widely. From reports by Burges Salmon and The Times Law Reports it seems that:

• "best endeavours" is a higher standard than "reasonable endeavours"
• "best endeavours" and "all reasonable endeavours" are equivalent standards.

Whilst the first point is established law, there has been dispute amongst contract lawyers as to the second; many regard "best endeavours" as being a higher standard than "all reasonable endeavours". Following Hiscox v Pinnacle, that view must be considered wrong. This is something that contract lawyer will have to take into account from now on.

In addition, the term "all reasonable and proper steps" was considered. The Court found that this standard was less onerous than "all reasonable endeavours".

For those that don't negotiate contract, this decision might seem a bit abstract and irrelevant. However, these standards of performance are often at the core of a contract and central to the deal - to oversimplify, the question issue is: how much a supplier has to do for its money?

Comments

[Franck]

The judgment is on BAILII: http://www.bailii.org/ew/cases/EWHC/Ch/2008/145.html

It is not that illuminating. There seems to be some tension (contradiction?) between [37] an obligation to use "all reasonable endeavours" should be equated with the more onerous obligation to use "best endeavours" and [56] that obligation - to use "all reasonable endeavours" - is more onerous than an obligation simply to use "reasonable endeavours", and is approaching an obligation to use "best endeavours".

Anyway, I am not sure that it adds much to Rhodia v Huntsman http://www.bailii.org/ew/cases/EWHC/Comm/2007/292.html

[Alex]

Thanks for the comment, Franck.