Using best or reasonable endeavours to satisfy contractual obligations?

An imperative question is raised when negotiating a share purchase agreement i.e. should the respective parties be required to use best endeavours or reasonable endeavours to fulfil their contractual obligations?

If one were obliged to use best endeavours to satisfy the aforementioned they would have a duty ‘to take all those steps in their power which are capable of producing the desired results … steps which a prudent, determined and reasonable [obligee], acting in his own interests and desiring to achieve that result, would take’ (IBM United Kingdom Limited v Rockware Glass Limited [1980] FSR 335). According to the Court of Appeal, an obligation to use best endeavours should normally be construed as an enforceable obligation save for situations where the desired objective is too vague or elusive, or there are no criteria for assessing one’s ability to utilise their best endeavours ( Ltd v Blackpool Airport Ltd [2012] EWCA Civ 417).

Conversely, an obligation to use reasonable endeavours is less onerous and has been expressly articulated to be ‘appreciably less than best endeavours’ (UBH (Mechanical Services) Ltd v Standard Life Assurance Co (circa 1986) The Times, 13 November 1986). Case law indicates that an obligation to use reasonable endeavours involves taking action, but only if it does not disadvantage the obligor. Furthermore, an obligation to use reasonable endeavours would mean taking one reasonable course out of many available options when trying to attain a specific objective. An obligation to use best endeavours however, entails taking all the reasonable courses one can to reach the coveted outcome (Rhodia International Holdings Ltd v Huntsman International LLC [2007] EWHC 292 (Comm)).

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