Jennifer Chappell, senior associate at Bircham Dyson Bell LLP,
is warning property owners to be wary of 'best endeavours'
clauses in contracts which could mean that their own commercial
interests may have to be sacrificed to fulfil their contractual
obligations.
The issue was highlighted in a Court of Appeal case between
Jet2.com airlines and Blackpool Airport. Jet2.com brought
proceedings claiming the airport was in breach of the best
endeavours obligation to promote its low-cost services and that the
airport was required to remain operational 'out of hours'
even though doing so might put it in financial dire straits.
"The 'best endeavours and 'reasonable
endeavours' obligations can crop up in any commercial contract
and the parties must be sufficiently certain as to what they mean
in the surrounding commercial context" explains Jennifer
Chappell.
"So for example, if a property owner were to sell a
property subject to another party getting planning consent and the
contract stated that the other party should use their 'best
endeavours' to assist with getting the consent, then that party
must be prepared to incur costs in time and money to aid the
process. Reasonable endeavours would mean taking a reasonable
course of action and co-operating with the other party, but not
necessarily take on any financial burden.
"Since the decision in Jet2.com, those who have signed
up to 'best endeavours' must be aware that they have to do
everything possible to assist in the process, even if it is to
their financial detriment and requires significant
expenditure".
"I would urge anyone entering into commercial contracts
to avoid agreeing to use best endeavours. Alternatively make sure
you understand what "best endeavours" means and set out
the parameters of what you are and are not expected to do -
ultimately it may cost you time and money."
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
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