I subscribe to the RSS feed of Mondaq.com, a repository of law-firm white papers, newsletters, whatever you want to call them. Occasionally something will show up that falls within my bailiwick, and last Friday I spotted a white paper issued by the English law firm Lawrence Graham LLP entitled “Drafting Contracts: How Useful Is the Boilerplate?”
I set it aside for a rainy day, as English case law on boilerplate wasn’t of immediate interest to me. But I couldn’t help notice that the author offered an analysis of Rhodia International Holdings Ltd. v. Huntsman International LLC, the recent English case on the meaning of best endeavours and reasonable endeavours. I did a blog post about this case, so I was interested to see what this author had to say. Here’s the relevant bit:
The question of whether a contract should include an obligation of “best” or “reasonable” endeavours is regularly raised during contract negotiations. In Rhodia International Holdings Ltd v Huntsman International LLC (2007) the High Court looked at the underlying considerations and, unsurprisingly, concluded that “reasonable endeavours” is a less stringent obligation than “best endeavours”. This is fairly well-established ground, but more usefully the Court went on to refine this view, saying that an obligation to use reasonable endeavours may be discharged by exhausting just one of a number of possible solutions, whereas best endeavours would require all avenues to be explored. Thus, it follows that an obligation to use all reasonable endeavours is likely to equate to using best endeavours.
I agree with the first sentence, but then the author lost me.
The author found the court’s analysis unsurprising and suggests that it’s “fairly well-established ground” that reasonable endeavours represents a less stringent standard than best endeavours. Note the weasel-word “fairly”—it set off in my mind the same sort of alarm bells as the Rhodia judge’s assurance that “one would surely conclude” that best endeavours and reasonable endeavours mean the same thing.
Even though I haven’t researched this issue under English law, I’d be very surprised if the alleged distinction were in fact well established. That’s because in terms of the semantics involved, the distinction is on shaky ground. And I have a hard time imagining that whereas U.S. courts have overwhelmingly held that the different efforts standards mean the same thing, English courts have come to the opposite conclusion.
But more to the point, if I were an English corporate lawyer, I wouldn’t care what courts say. Leaving aside the wishful thinking of the Rhodia judge, apparently there’s confusion as to what these terms mean—for one thing, the Rhodia judge wouldn’t have seen fit to address the topic otherwise. A drafter’s priority shouldn’t be sifting through the wreckage of a contract dispute, but instead using contract language that precludes the possibility of the parties being confused as to what they’re agreeing to. One way to make progress in that department would be to not use the phrase best endeavours (or, for a U.S. readership, best efforts).
I won’t go into further detail—I do so in my blog post, in my article on the subject, and in MSCD.
Instead, I want to move on to a more general thought that came to mind when I read Lawrence Graham’s analysis.
When on occasion I’ve been tempted to critique some published analysis of contract-drafting usages, it’s been suggested to me that to do so is somehow unseemly. I have a different and rather Darwinian view: If you have two conflicting analyses of case law, or how best to accomplish a given drafting goal, it’s unlikely that they’re both right. Instead, one analysis will be stronger than the other. In the marketplace of ideas, it’s for the best that ideas be tested, with the stronger ideas surviving. This sort of refining fire is altogether different from ad hominen attacks.
So I hope that Lawrence Graham doesn’t mind this critique. For my part, I’d be delighted if more people were to point out the shortcomings in my own writings. The sound thrashing that readers of this blog occasionally administer to me is one of the rewards of blogging.
2 thoughts on “Revisiting the English Case on “Best Endeavours” and “Reasonable Endeavours””
See the recent Jones Day publication “Best Efforts and Endeavours—Case Analysis and Practical Guidance Under U.S. and U.K. Law” at http://www.jonesday.com/pubs/pubs_detail.aspx?pubID=74ac4efb-0bee-4daf-a9a4-fa53f93da941&RSS=true , which cites Kenneth A. Adams extensively.
In reviewing a merger agreement negotiated by two well respected Wall Street firms a number of years ago as local counsel, I observed the use of “reasonable best efforts” and “best efforts” within the same document, neither with definition. I was told that the distinction was intended–that is there was a distinction, but to be determined only by litigation.
Deal Lawyer: Thank you for bringing the Jones Day analysis to my attention; it will be a useful source of recent “efforts” case law. I didn’t see anything in it that would prompt me to adjust my own analysis. Ken