Regular readers of this blog will be familiar with Glenn West. When it comes to analysis of contract boilerplate with big-deal implications, no one comes close to Glenn.
But Glenn has a mischievous side. He’ll sporadically send me stuff that he must know will irritate me; I imagine him hitting “Send” with a bit of a cackle. In the past couple of weeks he’s sent me two English newsletters about endeavours provisions. You win, Glenn—I’m taking your bait.
First, some background for those of you who are unfamiliar with what I do. I’ve written endlessly about efforts provisions: best efforts, reasonable efforts, and so on. English lawyers use in such provisions the word endeavours instead of the word efforts. People who work with contracts mostly think that different efforts provisions impose different levels of onerousness. U.S. courts disagree, essentially saying that all efforts provisions mean “reasonable efforts.” By contrast, English and Canadian courts endorse the notion of a hierarchy of efforts (or endeavours) provisions. I’ve long said that the notion of a hierarchy of efforts provisions makes no sense. Last year my law-review article on the subject was published; it’s here. It’s definitive—the first piece of real scholarship on the subject, and probably the last. Game over, case closed.
Having set the scene, let’s look at what Glenn sent me. This item is by Law 365. (I gather they’re an alternative-legal-services provider.) Here’s the gist:
The most onerous clause of the bunch, a best endeavour situation means a service provider is obligated to complete all the steps available to try to achieve the objective. This means everything in their power, even if this means putting their own interests aside.
[A reasonable endeavours] clause is the most widely used in commercial contracts as it requires the service provider to take a reasonable course of action to achieve the objective, even if there are other options available. …
A well-respected QC – Sir Julian Flaux – summarised the differences [between best endeavours and reasonable endeavours] in the case Rhodia International Holdings Ltd v Huntsman International LLC [2007}. …
Sitting happily between the previous two clauses, all reasonable endeavours put itself forward as a compromise clause.
Next we have this offering by Herbert Smith Freehills. Some nuggets:
An obligation to use “best endeavours” is generally accepted to require the highest standard of the three most common clauses.
An obligation to use “reasonable endeavours” is generally accepted to be the least demanding of the three common clauses.
An obligation to use “all reasonable endeavours” is arguably the most difficult to pin down of the three common terms. … The traditional view, however, is that the term is a middle position somewhere between “best” and “reasonable” endeavours.
These two accounts are broadly consistent, and they reflect the mainstream English view. But they’re divorced from reality, for reasons laid out at length in my article. The resulting shortcomings are painfully obvious. Consider the Herbert Smith Freehills piece. Because the distinctions offered in English caselaw are unworkable, and because trying hard is necessarily a function of circumstances, bright-line tests are impossible, so the piece is full of equivocation:
- surprisingly unclear
- typically interpreted
- but, unfortunately, has no clear answers
- generally accepted
- is likely to be interpreted as
- apparently does not require
- It seems clear
And on and on.
This piece also offers airy platitudes. “Where a party wants to ensure it can have regard to its own commercial interests, additional wording is advisable.” Uh, what kind of wording, exactly? “Where possible, add certainty by setting out steps that will, or will not, be required to meet the obligation.” But the whole point of endeavours provisions is that you use them when you can’t be specific, or don’t want to be.
As detailed in my article, we too in the United States are wedded to the notion of a hierarchy of efforts provisions. But in the United States, the caselaw acts as a restraining force. By contrast, English courts have bought into the unworkable distinctions.
That’s aggravated by a forelock-tugging deference on the part of English law firms. (Is it a class-system thing?) It turns what should be scholarship into a game of Simon Says, with English courts being Simon, as opposed to an objective inquiry into how best to express the deal. In that regard, Law 365 mentions Julian Flaux. If my article has a villain, it is he. For example, consider his conflicting statements regarding what all reasonable endeavours means (see footnotes 63 and 66 and the accompanying text). If he can’t keep track of distinctions English courts have invented, that doesn’t bode well for the rest of us.
As for how it comes to be that English courts have a marked fondness for legalistic hairsplitting (see page 720 of my article), I have no explanation.
If these two newsletters are consistent with what has come before, why write about them? Because policing the marketplace of ideas requires making the same points over and over, for anyone who happen to be listening.