Case Law Update: Reasonable Endeavours
by James Severn
It is not uncommon for a party to undertake in a contract that it will use its “reasonable endeavours” to procure a particular outcome. The meaning and enforceability of such an undertaking has been the subject of a number of decisions in the English Court but was most recently considered by Mrs Justice Rose the case of Minerva (Wandsworth) Ltd v Greenland Ram (London) Ltd  EWHC 1457(ch).
That case concerned Greenland’s obligation to “use reasonable endeavours to minimise the amount of any affordable housing which may be required in order to secure [enhanced planning permission on a residential site]”. The Judge found that there had been no such failure and set out the test that should be applied when considering if a party has satisfied its obligation to use reasonable endeavours to achieve a particular outcome.
The test is an objective one and the question to be asked is “what a reasonable and prudent person acting properly in their own commercial interest and applying their minds to their contractual obligation would have done”.
In considering what was reasonable, the Court will consider whether any steps would have been successful and it is most unlikely to be a breach of the obligation to use reasonable endeavours if taking the steps proposed would have made no material difference to the outcome. The Court also pointed out that a party alleging a breach of such an obligation must be able to identify a specific failure on the part of the counter-party.