The terms 'best endeavours', 'reasonable endeavours' and the variations 'all reasonable endeavours', 'commercially reasonable endeavours' or 'reasonably commercial endeavours' and 'utmost endeavours' are frequently used in drafting commercial agreements and may be the result of considerable negotiation and often represent a compromise.
These terms represent a range of obligations at different ends of the spectrum. The most onerous obligation which can be imposed is a strict or absolute obligation. Next is the obligation of best endeavours followed by all reasonable endeavours. At the other end of the spectrum is the obligation to use reasonable endeavours. The precise obligations imposed by each of these terms is far from certain and have frequently been the subject of judicial interpretation with varying results.
This Practice Note considers the terms ‘best endeavours’, ‘all reasonable endeavours’ and ‘reasonable endeavours’ that are frequently used in commercial agreements.Contracting parties usually have a polarised approach to ‘endeavours’ terms, with one party seeking to impose the most onerous form of the obligation on the other party, and the other party trying to resist it. The final position is usually reached following considerable negotiation and often represents a compromise where one party has argued that it is not reasonable for it to be placed under an absolute obligation.This Practice Note considers the relevant case law and the meanings that have been given to the terms:•best endeavours•all reasonable endeavours, and•reasonable endeavoursIt also provides guidance for commercial lawyers to consider when drafting and negotiating such obligations. See: Drafting endeavours clauses below.Absolute obligations compared to ‘endeavours’ obligationsThe most onerous obligation which can be imposed in an agreement is an absolute obligation to do something. An example would be ‘the Seller will deliver the goods’, which will be breached if the obligation is not performed regardless of the reason (subject to other terms which may excuse performance, such as force majeure). Similarly, an obligation to ‘procure’ that something is done creates an absolute obligation on a party to make sure that it happens (Nearfield Ltd v Lincoln Nominees Ltd).However, an absolute obligation may
Commercial service charges—a practical lease negotiation guide Landlord’s service charge objectives The landlord’s main concern is to ensure that the costs of maintenance and repair of the building are passed on to the tenants and are not deducted from the landlord’s income/rents. This is sometimes referred to as the ‘clear lease’ principle. If the landlord sells its asset, one of the buyer’s key questions will be whether the service charge is fully recoverable. If it is not, then the market value of the landlord’s investment is likely to be impacted. Other key aims for the landlord are: • flexibility in deciding when and how the services are provided • limiting its obligations in the lease to providing core services while retaining flexibility to recover other sums • maintaining consistency across leases in a multi-let building, and • ensuring that there are no ‘holes’ for costs to fall through. Inevitably, there may be something which is required which did not occur to either party at the time of the grant of the lease so the landlord will want to include a catch-all ‘sweeper clause’ in the service charge which sweeps up any items of expenditure not covered elsewhere in the list of recoverable costs (although note that the Model Commercial Lease (MCL) does not contain a sweeper clause). Service charge clauses are likely to be narrowly construed against the landlord and will
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For insertion in a sale contract The Seller and the Buyer agree that: • except where such disclosure is required in order to comply with the requirements of any statutory or other competent authority [or for the purpose of any subsequent dealing with or financing of the Property or notification of occupational tenants], neither of them shall disclose to any third person[, except the
1 Overseas assignment 1.1 You agree to be assigned to work for the Employer in [specify country or area in which the employer's operations are carried out] (the ‘Territory’) for [the period from [enter date] to [enter date] OR a period not exceeding [enter duration, eg ten weeks, three months, two years] from such date as the Employer may specify] (the ‘Assignment’). 1.2 During your Assignment, your duties will [consist of OR include acting as] [specify duties] in [enter location] and, at the end of your Assignment, the Employer will[ use its best endeavours to] find employment for you[ within its business] in a position and on terms no less favourable to you than you would reasonably expect to enjoy had your employment continued with the Employer in the United Kingdom with the Employer throughout the period on which you have been on overseas assignment. 1.3 During your Assignment, you will receive [enter currency and figure] to be paid (provided it is lawful to do so)[ in local currency] to your nominated bank account in [insert name of country OR the Territory] [instead of OR in addition to
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What meaning should be given to an obligation to provide services in ‘a first class manner’? The clause in question has two important elements: • ‘best endeavours’, and • ‘first class manner consistent with the standard expected of a first class production company’ Best endeavours The endeavours obligation is relevant to an understanding of the clause as a whole because it means that the obligation of the producer is not absolute. Rather, the producer must use no less than its best efforts to meet the required standard. See Practice Note: Reasonable and best endeavours. First class manner consistent with the standards expected of a first class production company Section 13 of the goods'>Supply of Goods and Services Act 1982 (SGSA 1982) implies a term into relevant contracts that, where the supplier is acting the
A retired farm worker, living on a farm in a cottage has Rent (Agriculture) Act 1976 protection. He has agreed to move to another cottage with continued protection. How should the agreement be documented? Once a person gains the status of protected occupier or statutory tenant under Rent (Agriculture) Act 1976 (R(A)A 1976), he retains the protection of that Act if another relevant licence or relevant tenancy is granted of the same or another dwelling. Although Housing Act 1988 (HA 1988) introduced a general principle that new interests granted after 14 January 1989 were to be assured rather than protected by the previous statutory regime,
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Arbitration analysis: The Indian Supreme Court has passed directions to the provincial High Courts to decide all pending arbitrator appointment applications within a period of six months from the date of its directions. It has also directed the High Courts to decide and dispose of fresh applications, preferably within a period of six months from the date of filing. This case highlights the risks in contracting for ad hoc agreement to arbitrate that entails submission to the Indian courts for supervisory support, including to appoint an arbitrator. While this order of the Supreme Court is laudable and important, parties should provide for an arbitral procedure that is governed by the rules of a reputable arbitral institution to avoid having to resort to the Indian courts for appointment of arbitrators. Written by Sheila Ahuja (partner) and Amrutanshu Dash (associate) at Allen & Overy LLP.
Construction analysis: We look at the possible effects which the conflict in Ukraine and economic sanctions imposed on Russian businesses and exports may have on the UK construction industry, and how they may be dealt with in both existing contracts and contracts entered into from March 2022 onwards.
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