THE MEANING OF ‘ALL REASONABLE ENDEAVOURS’

One of the issues considered by Mr Justice Vos in CPC Group Ltd v Qatari Diar Real Estate Investment Company [2010] EWHC 1535 (Ch), [2010] All ER (D) 222 (Jun) was the meaning of the phrase ‘all reasonable endeavours’. He held that an obligation to use ‘all reasonable endeavours’ does not necessarily require the party subject to the obligation to sacrifice its commercial interests. Crucially, the obligation in the contract was in any event qualified by the words ‘but commercially prudent’ endeavours. This put a ‘brake’ upon the obligation and underlined the fact that the party subject to the obligation was entitled to take account of its own commercial interests.

The background

It is not uncommon for construction contracts to impose upon a contracting party an obligation to use ‘reasonable endeavours’, ‘best endeavours’, ‘all reasonable endeavours’ or, as in the present case, ‘all reasonable but commercially prudent endeavours.’ Notwithstanding the frequent use of these phrases, some doubt still remains as to their meaning and the extent of the obligation which they impose upon a contracting party. The difference between an obligation to use ‘reasonable endeavours’ and one to use ‘best endeavours’ can be hotly debated in the process of negotiating a contract, but it is far from clear that there is a fundamental difference between the two obligations. The difference would appear to be one of degree and not of kind.