What best endeavours means
An endeavours obligation requires a party to try to achieve something rather than to guarantee it.
It is used where the outcome is not entirely within the party's control: obtaining a regulatory approval, securing a third party consent, achieving a sales target, procuring a licence.
There is a recognised scale.
Reasonable endeavours is the lowest. The party must take reasonable steps, and it is generally entitled to weigh its own commercial interests. Taking one reasonable course may be enough even if others were available.
All reasonable endeavours sits between. The party is generally expected to exhaust the reasonable courses available rather than choosing one.
Best endeavours is the highest. It has been described as requiring a party to take all steps a prudent and determined person acting in their own interests would take, which can include incurring expenditure and acting contrary to their own commercial interest, though it does not require commercial suicide.
The distinctions are real, and they are also imprecise, which is the practical problem.
How it is used
Because the standards are imprecise, disputes about whether a party tried hard enough are common and hard to resolve.
That produces the drafting advice practitioners actually give: specify the steps.
Rather than obliging a party to use best endeavours to obtain a consent, list what they must do. Submit the application within a stated period. Provide the information reasonably requested. Escalate if no response within a stated time. Pay the prescribed fees. Attend meetings. Report progress fortnightly. Notify the other party immediately if refusal appears likely.
That converts an argument about effort into a checklist about compliance.
Where an endeavours obligation is used, three points improve it.
Say what the party is not required to do. Commonly, not required to commence litigation, not required to pay more than a stated sum, not required to agree onerous terms.
Set a longstop date, so that failure has a consequence rather than continuing indefinitely.
And say what happens if the objective is not achieved: termination, a price adjustment, or the obligation simply falling away.
Key features
- An obligation to try rather than to guarantee an outcome
- Used where the result depends partly on third parties
- Reasonable endeavours is the lowest standard on the scale
- Best endeavours is the highest and can require expenditure
- The standards are imprecise and frequently litigated
- Specifying the required steps is better drafting than any label
How this works in Nigeria
Nigerian contracts use endeavours obligations heavily in exactly the places where outcomes depend on third parties, and those are the places where Nigerian timelines are least predictable.
Obtaining the Governor's consent on a land transaction. Securing a regulatory licence. Obtaining a business permit or an expatriate quota. Getting a landlord's consent to an assignment. Procuring a third party to enter a direct agreement.
In each case the party undertaking the obligation cannot control the outcome and can control the effort.
The practical drafting response for a Nigerian transaction is the same as elsewhere but more important, because the processes take longer and stall more often.
List the steps. Set the deadlines for each step rather than only for the outcome. Require regular written reporting so the other party can see whether anything is happening. And provide a longstop date with a defined consequence.
A property sale conditional on the seller using best endeavours to obtain consent, with no steps, no reporting and no longstop, is a transaction that can sit unresolved for two years with money already paid, and the buyer has no practical way of establishing that the seller has not tried.
The reporting requirement is the single most useful addition. A party who must report fortnightly on what they have done either does something or produces a written record of having done nothing.
Best endeavours vs reasonable endeavours vs absolute obligation
Three levels of commitment to an outcome.
An absolute obligation requires the outcome. The party must deliver, and failure is a breach whatever the reason and whatever efforts were made. It is appropriate where the party genuinely controls the result.
Best endeavours requires the party to take the steps a prudent and determined person acting in their own interests would take, which can include spending money and acting against their own commercial interest, short of commercial suicide.
Reasonable endeavours requires reasonable steps, and the party may generally weigh its own commercial interests. Taking one reasonable course may suffice.
A party accepting an obligation should push down this scale and a party imposing one should push up it. Both should recognise that whichever label is used, listing the required steps produces more certainty than the label ever will.
Limits and risks
The standards are imprecise, so outcomes are unpredictable and disputes are expensive.
Proving that a party did not try hard enough is also difficult, because the evidence is largely in their hands.
The obligation can persist without producing anything, tying parties to a transaction that is going nowhere.
And even best endeavours does not require a party to act to its own serious detriment, so the highest standard is still bounded in ways that are themselves uncertain.
Worth knowing
Replace the endeavours obligation with a list of steps and deadlines wherever the outcome matters. A Nigerian transaction conditional on somebody using best endeavours to obtain consent, with no steps, no reporting and no longstop date, can sit unresolved for two years.
Questions people ask
What does best endeavours mean?
An obligation to take the steps a prudent and determined person acting in their own interests would take, which can include incurring expenditure and acting against the party's own commercial interest, though not to the point of commercial suicide.
How does it differ from reasonable endeavours?
Reasonable endeavours is a lower standard. The party must take reasonable steps and may generally weigh its own commercial interests, and taking one reasonable course may be enough.
What is all reasonable endeavours?
An intermediate standard under which a party is generally expected to exhaust the reasonable courses available rather than choosing one, sitting between reasonable and best endeavours.
Why are these clauses litigated so often?
Because the standards are imprecise, whether a party tried hard enough is a matter of judgment, and the evidence about what was actually done is largely in that party's hands.
What is better drafting?
Specifying the steps: submit by a date, provide requested information, escalate after a period, pay prescribed fees, report progress in writing, and notify immediately if refusal appears likely.
Should there be a longstop date?
Yes. Without one the obligation can persist indefinitely while nothing happens. A longstop with a defined consequence, such as termination or a price adjustment, gives the arrangement an end.