Housebuilder Top Tip: Reasonable Endeavours - should I be relaxed?

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Housebuilder Top Tip: Reasonable Endeavours - should I be relaxed?

Published 29 January 2019

An obligation to use "endeavours" to discharge a covenant is commonly encountered by housebuilders when negotiating land documents. The effect is that this dilutes an absolute obligation (“I shall”) to that of a lesser standard (“I shall try”). Whilst clearly attractive, the devil (as ever) is in the detail and developers should be alive to the onerous impact that can arise from a few simple words:

Reasonable Endeavours – this is viewed as the least onerous obligation requiring a developer to take a reasonable step but not where this is against its commercial interests.

All Reasonable but Commercially Prudent Endeavours – recent case law interprets this to require a developer to use all reasonable endeavours but not to the extent that the party should sacrifice its commercial interests.

All Reasonable Endeavours – this is viewed as a middle ground between best endeavours and reasonable endeavours. Case law presently interprets this to require all reasonable steps to be taken by a developer and possibly (but not always) sacrificing its commercial interests.

Best Endeavours – this is the most onerous obligation and should not be accepted lightly. This means taking all steps which a prudent, determined and reasonable developer would take, including potentially sacrificing its commercial interests.

An endeavours clause will be interpreted on the basis of the parties' intention at the time of drafting the contract. To avoid ambiguity, developers should consider setting out what steps they are expected to take as well as the ambit of any expenditure (including consideration of a cap).

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