Understanding ‘Best Endeavours’ in Legal Contracts

As a small or medium-sized business owner, reviewing legal contracts can feel like reading a foreign language. One particularly confusing term you may come across is the “best endeavours” clause. This article will explore what this phrase means and how it can affect your company. 

The Basics: What is a Best Endeavours Clause?

A best endeavours clause is a provision in a contract that requires one party to make a sincere, diligent effort to achieve a particular outcome or objective. However, more is needed to ensure the desired result will be accomplished.

‘Best endeavour’ clauses are considered a middle ground – stronger than a vague promise to try your best, but not as strict and uncompromising as an absolute obligation to achieve the objective at all costs. 

With a best endeavours clause, the committed party has to genuinely apply themselves and take tangible steps toward the contractual objective, but an unsuccessful outcome doesn’t automatically make them liable for breach of contract.

When are Best Endeavours Clauses Used?

These types of clauses are commonly included in business contracts where external factors outside the parties’ control could impact or prevent achieving the stated objective. For example, if the desired outcome depends on getting approval or cooperation from a third-party regulator, government body, or another company.

How are Best Endeavours Interpreted?

There is no statutory definition of ‘best endeavours’. Instead, suppose a dispute arises later over whether one party applied sufficient “best endeavours” toward the objective as required. In that case, courts will look at the overall situation and specific circumstances to make a judgment. 

Some key factors considered include:

• the nature and extent of the efforts that were actually taken and documented;
• the resources, capabilities, and operational constraints the party had to work with;
• typical industry practices, standards, and what is commercially reasonable;
• whether the party acted with diligence and followed sensible decision-making; and
• if the actions taken were reasonable and justified given the particular circumstances

The core question is whether the committed party took all viable, commercial steps that a motivated, reasonable person would take if they were working solely in their own interests and welfare.

It does not require jeopardising the party’s legitimate business interests, financial well-being or personal safety in pursuing the objective. Still, it does require more than the bare minimum (which could include significant expenditure or effort). 

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Other Types of Endeavours Obligations

“Best endeavours” is the strictest and most demanding form, but some other common variations of the ‘endeavours’ clauses exist:

• Reasonable Endeavours: a lower obligation that only requires taking reasonable steps that a prudent and determined person would take in particular circumstances. It does allow a party to consider its own commercial interests and does not require that party to take actions that could be detrimental to those interests;
• All Reasonable Endeavours: a middle ground between the reasonable and best endeavours obligations; however, there is ambiguity as to how this differs from “best endeavours”; and
• Commercially Reasonable Endeavours: this requires making reasonable efforts toward the objective, but only those that are viable from a commercial standpoint for protecting the party’s core business interests.

Whether a party has done all that is required to meet an obligation will depend on which of the above obligations is included in a contract and is typically a matter for a court to determine.  

Practical Pointers  

When best endeavours or other endeavours clauses appear in your contracts, keep these points in mind:

• carefully consider the wording and your ability to achieve what is required;
• document your efforts thoroughly, as evidence may be crucial if disputes arise later;
• maintain transparent communication with the other party about progress and challenges;
• understand that efforts must be sensible, not jeopardise commercial viability; and
• seek legal advice if unsure about the interpretation of the specific clause language.

Best endeavours clauses strike a balance between reasonably allocating obligations and risks between parties to a business agreement by acknowledging limitations while still requiring genuine attempts.

Key Takeaways

A best endeavours clause requires a party to make a sincere, diligent effort toward an objective. However, it does not guarantee that the desired outcome will be achieved.  It strikes a middle ground between a vague promise and an absolute must-succeed obligation.  These clauses are commonly used when external factors outside a party’s control could impact achieving the objective.

Courts judge whether best endeavours were made by looking at documented efforts, resources, industry practices, diligence, and reasonableness of actions. Best endeavours do not require jeopardising legitimate business interests, but they do require more than token efforts.

If you need help complying with contractual wording, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to solicitors to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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