"Reasonable endeavours" is a phrase frequently used to impose a level of obligation on a party under a contract and accordingly, the phrases "all reasonable endeavours" and "best endeavours" are respectively used to infer greater levels of obligation on a party.  However, without further definition, these phrases are not precise in terms of what is actually expected of a party imposed with such an obligation and this has often led to discussion and debate. 

Whilst the courts have in the past given a certain level of guidance as to the meaning of "reasonable endeavours" and "best endeavours", little has been said about "all reasonable endeavours", with it generally being considered to fall somewhere in the middle of the 2 extremes. 

However, in 2009 case CEP Holdings Limited and CEP Claddings Limited -v- Steni AS [2009], the High Court addressed the question of what is meant by 'all reasonable endeavours", in the context of a 20 year exclusive distribution agreement.  In the case in hand the supplier terminated the distribution agreement on the basis that the distributor had failed to use "all reasonable endeavours" to promote and sell the supplier's product.  The High Court determined that, in order to comply with the contractual obligation to use "all reasonable endeavours", the distributor in this case should have done "everything that a reasonably competent and energetic distributor would do to promote the marketing and sales of [the supplier's] products". 

This is in contrast to "reasonable endeavours" which the courts have previously indicated requires a party to take possibly one course (or a small number of courses) of action to achieve the aim, but not all of them. On the flip side, it was noted in the case of Sheffield District Railway -v- Great Central Railway, that "best endeavours means what it says - it does not mean second best endeavours" and therefore a party under such an obligation will be expected to go above and beyond just that which might considered reasonable.

Whilst the level of obligation actually imposed on a party will ultimately relate to the situation and knowledge of the parties at any given time during a contract (as is evidenced in the Steni case where various points were considered and taken into account in the judgement) the case does at least provide some useful guidance on what level of expectation may be imposed on a party by an obligation to use 'all reasonable endeavours".

Therefore, wherever possible it is be better to avoid such terminology and clearly define the relevant obligations of each party at the outset of the contract so as to minimise the likelihood of dispute in the future.

If you have any queries regarding contractual obligations, distributor agreements or any other commercial contract matter please feel free to contact the Commercial team at Lee and Priestley who will be happy to help.

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