When negotiating a commercial contract, the wording used to describe obligations can significantly impact risk, cost, and enforceability. Few phrases cause more uncertainty and more disputes than “best endeavours” and “reasonable endeavours”.
These terms are commonly used in UK contracts to qualify how far a party must go to achieve a particular outcome. However, they are not interchangeable. Understanding the difference between best endeavours and reasonable endeavours is essential for businesses seeking clarity on their obligations and protection against unintended liability that could result in a contractual dispute.
This article explains how these clauses are interpreted under English law, the practical implications for businesses, and when each approach may be appropriate.
What Do Endeavours Clauses Do?
Endeavours clauses are used where a party cannot guarantee a specific result but agrees to try to achieve it. Common examples include:
- Obtaining regulatory approvals
- Securing third-party consents
- Completing a transaction by a target date
- Achieving funding or financing
Rather than promising success, the party promises a level of effort. The type of endeavours clause used determines how much effort is legally required.
What Is a Best Endeavours Obligation?
A best endeavours clause imposes the highest standard of obligation short of an absolute guarantee.
Under English law, a party required to use best endeavours must take all reasonable steps within its power to achieve the stated objective. This can include actions that are inconvenient, costly or commercially unattractive, provided they do not threaten the company’s existence.
Courts have held that best endeavours may require a party to:
- Incur significant expense
- Sacrifice commercial advantage
- Prioritise the contractual objective over other interests
However, a party is not usually required to act irrationally or to the point of insolvency.
What Is a Reasonable Endeavours Obligation?
A reasonable endeavours clause sets a lower, more flexible standard.
In broad terms, it requires a party to take one reasonable course of action, rather than exhausting all possible options. The party is entitled to balance the contractual objective against its own commercial interests.
When assessing reasonable endeavours, courts consider:
- The cost of compliance
- The likelihood of success
- The impact on the business as a whole
This makes reasonable endeavours a more business-friendly obligation, particularly where outcomes depend on external factors.
Best Endeavours vs Reasonable Endeavours: The Key Differences
The distinction between best endeavours vs reasonable endeavours is not always black and white, but some core differences are well established.
Level of Effort
Best endeavours require pursuing all reasonable options.
Reasonable endeavours usually require pursuing at least one reasonable option.
Commercial Sacrifice
Best endeavours may require significant commercial sacrifice.
Reasonable endeavours allow greater protection of commercial interests.
Risk Exposure
Best endeavours carry higher litigation and cost risk.
Reasonable endeavours are easier to defend if challenged.
For businesses, this distinction can be decisive when negotiating risk allocation.
How Courts Interpret Endeavours Clauses
English courts do not apply a rigid formula when interpreting endeavours clauses. Instead, they look at:
- The wording of the contract
- The commercial context
- The nature of the obligation
- What the parties reasonably intended
Importantly, courts often emphasise that endeavours clauses should not be interpreted in isolation. A best endeavours obligation in a high-value, time-sensitive contract may be interpreted more strictly than the same wording in a preliminary agreement.
Is There a Middle Ground?
Some contracts use hybrid wording, such as:
- “All reasonable endeavours”
- “Commercially reasonable endeavours”
“All reasonable endeavours” is generally seen as a midpoint between best endeavours and reasonable endeavours, potentially requiring more than one course of action but not the full extent of best endeavours.
“Commercially reasonable endeavours” explicitly allows consideration of commercial impact, although it still requires careful drafting to avoid ambiguity.
Practical Examples for Businesses
Consider a contract requiring a company to obtain third-party consent.
- With a best endeavours clause, the company may be required to renegotiate terms, offer incentives, or absorb additional costs to secure consent.
- With a reasonable endeavours clause, the company may only need to make a genuine attempt using one sensible approach, even if alternatives exist.
In a financing context, a best endeavours obligation could require pursuing multiple lenders, while reasonable endeavours might only require approaching a limited number.
Risks of Ambiguity in Endeavours Clauses
One of the biggest risks with endeavours clauses is uncertainty.
Poorly drafted clauses can lead to disputes over:
- Whether sufficient steps were taken
- Whether commercial considerations were legitimate
- Whether alternative actions should have been pursued
In litigation, these disputes often become fact-heavy and expensive, with outcomes depending on evidence of internal decision-making.
Clear drafting, sometimes supplemented by specific examples of required steps, can significantly reduce this risk.
When Should You Use Best Endeavours?
Best endeavours may be appropriate where:
- The obligation is critical to the contract
- One party has significant control over the outcome
- The risk is deliberately being allocated
However, parties should understand that agreeing to best endeavours can expose them to extensive obligations and scrutiny.
When Is Reasonable Endeavours More Appropriate?
Reasonable endeavours are often better suited where:
- Outcomes depend on third parties
- Costs and effort are difficult to predict
- Flexibility is commercially important
For many businesses, reasonable endeavours provide a more balanced and defensible obligation.
Why Legal Advice Matters
The choice between best endeavours vs reasonable endeavours should never be an afterthought. These clauses can materially affect performance expectations, liability exposure and dispute risk.
At Ignition Law, we advise clients on:
- Drafting clear and enforceable endeavours clauses
- Assessing risk in existing contracts
- Negotiating appropriate standards of obligation
- Resolving disputes involving alleged breaches
Our focus is on aligning legal drafting with commercial reality.
Final Thoughts
Endeavours clauses are deceptively simple but legally powerful. The difference between best endeavours and reasonable endeavours can determine how far a business must go, and how exposed it becomes if things go wrong.
If you are negotiating a contract or reviewing existing agreements and want clarity on endeavours obligations, Ignition Law can help. Contact our team for expert, practical advice tailored to your commercial objectives and risk appetite.
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