“Reasonable endeavours” unenforceable

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Facts

The parties entered into a settlement agreement resolving a dispute.  The settlement agreement included a stipulation that the Claimant would use its reasonable endeavours to enter into contract with a third party agreement to have restoration work carried out to a classic car.  The work was not carried out, and Dany Lions sued Bristol Cars for failing to use reasonable endeavours.

Dany Lions Limited v Bristol Cars Limited (2014) BLM

Held

The obligation which was the subject of reasonable endeavours was itself too vague.  It was not an obligation to do work, it was an obligation to enter into an agreement with a third party, who might or might not be willing to agree terms, to do work.

Commentary

The courts have no time for “agreements to agree”.  Something which is too uncertain cannot be enforced by the courts.

Only use reasonable endeavours in contracts when:

  • the object is clearly defined and possible to achieve;
  • the third party contract is set out in sufficient detail in advance and all terms have been agreed by the third party.

If you cannot achieve the objective of a reasonable endeavour clause, ensure that you have tried everything to complete it.  Stopping before this could increase liability.

For further information, help or advice please contact Rob Langley on 0191 211 7975.