Reasonable endeavours clauses

Business and commercial contracts often contain provisions requiring the parties to use their reasonable endeavours to perform an obligation or achieve an outcome. These provisions are intended to qualify (ie, lessen the onerousness of) the relevant contractual obligations so that they are not absolute or strict obligations. This can be useful where the parties are unsure about whether it will be possible to achieve a particular contractual outcome — eg, because the parties need to rely on a third party whom they cannot control in order to achieve that outcome.

Authored by the LexisNexis Legal Writer team.

Business and commercial contracts often contain provisions requiring the parties to use their reasonable endeavours to perform an obligation or achieve an outcome. These provisions are intended to qualify (ie, lessen the onerousness of) the relevant contractual obligations so that they are not absolute or strict obligations. This can be useful where the parties are unsure about whether it will be possible to achieve a particular contractual outcome — eg, because the parties need to rely on a third party whom they cannot control in order to achieve that outcome.

For example:

• If a contract provides that a party “must obtain landlord consent”, then that party will generally have breached that obligation if it cannot obtain the consent for any reason (including reasons outside that party’s control).
• However, if a contract provides that a party “must use its reasonable endeavours to obtain landlord consent”, then that party will not necessarily have breached the obligation if it cannot obtain the consent — it will only have breached the obligation if it has failed to use “reasonable endeavours” to obtain it.

The most common formulations used to qualify obligations in this way are that a party must use its “reasonable endeavours” or “best endeavours” in pursuit of the contractual goal.