by Gemma Brown

Commercial contracts often impose an obligation on one or more of the parties to use either their "reasonable," "all reasonable" or "best" endeavours to achieve a specific outcome at a later date.

Even though these terms are widely used, there is still uncertainty as to the obligations imposed by each of them and this has led to a vast amount of case-law containing various interpretations by the courts.

As non-performance could be a breach of contract leading to a potential claim for damages against the party concerned, it is extremely important that you are aware of the difference between these terms so you know what commitments are going to be imposed on you before you enter into a contract.

The courts have held that a "reasonable" endeavours obligation is less onerous than a "best" endeavours commitment.

"Best" endeavours will require the party concerned to take all reasonable courses of action it can, which could also require it to act against its own commercial interests. "Reasonable" endeavours only require the party concerned to take one reasonable course of action, not all reasonable courses of action, and it would not be required to act against its own commercial interests.

A provision to use "all reasonable" endeavours imposes obligations that sit between the two. This is the least well-developed clause and has not been considered as much by the courts.

If you are required to agree to an endeavours obligation it is important that your legal adviser explains what obligations could be required of you and that you record the steps you have taken to comply with the obligation in detail in order to ensure you can show that you have done what you can to meet the obligation.

The courts will interpret the degree of endeavours required through looking at the circumstances of the individual case and other terms contained within the contract.

Therefore the parties will need to ensure they are aware of the measure of effort which is intended to be imposed and that the wording in the contract is drafted appropriately.

• Gemma Brown is a solicitor in the corporate department at Vertex Law LLP and can be contacted at gemma.brown@vertexlaw.co.uk or on 01732 224000.