The following Commercial practice note provides comprehensive and up to date legal information covering:
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:
all reasonable endeavours, and
It also provides guidance for commercial lawyers to consider when drafting and negotiating such obligations. See: Drafting endeavours clauses below.
The 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 not be
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What is rescission of a contract?The remedy of rescission is available to a party whose consent, in entering into a contract, has been invalidated in some way:•the effect of rescinding a contract is to extinguish it and restore the parties to their pre-contractual positions•the main grounds of
Express and implied contractual terms distinguishedContractual terms may be either express or implied:•express terms—are terms which are actually recorded in a written contract or openly expressed in an oral contract at the time the contract is made (or there may be a combination of written and oral
ContractWhere a contract is made by two or more parties it may contain a promise or obligation made by two or more of those parties. Any such promise may be:•joint•several, or•joint and severalWhether an undertaking is joint, several, or joint and several in contract is a question of construction
This Practice Note is an archive of news from the Loan Market Association (LMA) on LMA documentation and related topics. It covers LMA updates from early 2013 to January 2016. For the latest LMA developments since January 2016, see Practice Note: Loan Market Association (LMA)—latest news on
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