JULY 2012 NEWSLETTER
Best endeavours
undertakings –
what do they mean?
Legalese was once defined as “a word
or phrase that a lawyer might use in
drafting a contract…but would not use
in conversation with his wife [or her
husband]”. Imagine a lawyer saying
to a non-lawyer spouse: ‘Darling, I am
applying makeup quickly, please use
your best endeavours to wash the dishes
before we go.’ The non-lawyer spouse
will be forgiven for being surprised about
the choice of words. It may well be that
legalese survive because some lawyers
have mastered the ‘art’ of keeping the
legalese within the ‘club’ whilst using it
selectively to befuddle the unwary and
amuse clients.
entered into a letter agreement with
Blackpool Airport Limited (“BAL”), an
owner and operator of a commercial
airport in Blackpool (“Blackpool
Airport”). Clause 1 of the said letter
agreement provided as follows:
Recently, in the UK case of Jet2.Com
Limited v Blackpool Airport Limited
[2012] EWCA Civ 417 (“Jet2.Com
Case”), it was reported that the phrase
“best endeavours” has been used since
at least 23 January 1815. This is resilience
typified. It is not clear which one came
first, however, “best endeavours”,
“all reasonable endeavours” and
“commercially reasonable endeavours”
are clearly descendants of the
same dynasty extensively utilised in
agreements by draftswomen [sorry,
and draftsmen] sometimes with scant
appreciation of potential interpretation
difficulties. But what do these phrases
mean?
The letter agreement regulated the
terms on which Jet2 was to operate
from the Blackpool Airport. The
Blackpool Airport was required to be
open between 7:00 a.m. and 9:00 p.m.
(“normal hours”). Operation outside of
these hours resulted in BAL incurring
additional costs. However, over a period
of four years, Jet2 operated flights from
the Blackpool Airport and BAL did not
have issues with arrivals and departures
outside normal hours. The relationship
between the parties later soured. On
22 October 2010, BAL gave Jet2 notice
that with effect from 29 October 2010
flights to and from Blackpool Airport
outside normal hours will not be allowed.
BAL’s decision was then implemented
and it resulted in two Jet2 flights being
diverted to Manchester at a great
inconvenience to passengers and costs
to Jet2.
It is not normal that in one case all
sitting judges write their own judgments
on the matter in issue. This however
happened in the Jet2.Com Case and the
interpretation of “best endeavours” and
“all reasonable endeavours” was in issue.
The facts were as follows: Jet2.Com
Limited (“Jet2”), a low cost airliner,
1
| NewSLETTER | JUly 2012
For more information on this
newsletter, please contact one of
the following attorneys:
“1. Jet2.com and BAL will co-operate
together and use their best
endeavours to promote
Jet2.com’s low cost services from
BA [Blackpool Airport] and BAL
will use all reasonable endeavours
to provide a cost base that will
facilitate Jet2.com’s low cost
pricing.”
Tony Tshivhase
Director
T +27 (0)11 656 0804
E [email protected]
Siyabonga Shandu
Jet2 initiated legal proceedings against
BAL in the High Court arguing that
the obligation imposed on the parties
in terms of the letter agreement to
Director
T +27 (0)11 656 0804
E [email protected]
Best endeavours undertakings –
what do they mean?
use their best endeavours to promote
Jet2’s business obliged BAL to handle
arrivals and departures between 6:00
a.m. and midnight and to do its best
to accommodate Jet2’s occasional
movements outside these hours. BAL’s
riposte was, among others, that it was
entitled to take into account its own
commercial interests when deciding
what steps to take in the exercise of
its best endeavours to promote Jet2’s
business.
The High Court decided that BAL had
breached the undertaking in the letter
agreement to use its best endeavours to
promote the business of Jet2. The Judge
said that it was not the intention of the
parties that BAL would change what it
did on an on-going basis (i.e. accepting
arrivals and departures outside normal
hours) because of the financial difficulties
that BAL was facing. BAL appealed to the
Court of Appeal.
In his majority decision, Moore-Bick
LJ (with Longmore LJ agreeing and
Lewison LJ dissenting) considered cases
from 1911 to 2010 where the phrases
“all reasonable endeavours” and “best
endeavours” were interpreted and
confirmed the decision of the High Court
that BAL had indeed breached the letter
agreement; he said:
“In my view the obligation to use
best endeavours to promote Jet2’s
business obliged BAL to do all that
it reasonably could to enable that
business to succeed and grow and
I do not think the object of the best
endeavours is too uncertain to be
capable of giving rise to a legally
binding obligation. In my view the
promotion of Jet2’s business did
extend to keeping the airport open
to accommodate flights outside
normal hours, subject to any right
it might have to protect its own
financial interests. Accordingly,
I think the [High Court] judge’s
decision on that aspect of the matter
was correct. On the other hand,
an obligation to use all reasonable
endeavours to provide a cost base
that will facilitate some essential
element of another person’s business
seems to me to pose greater
problems, because it is much more
difficult to identify its content.
The words are said to import an
obligation to use all reasonable
endeavours to enable Jet2 to keep
its unit costs (and therefore ticket
prices) down by enabling it to use its
aircraft in the most efficient manner,
but I find them too opaque to enable
me to give them that meaning
with any confidence.” [At Para [31],
Emphasis added].
Further, Moore-Bick LJ referred to
BAL’s argument that its obligation to
use best endeavours did not require it
to act contrary to its own commercial
interests and said that “…whether, and
if so, to what extent, a person who has
undertaken to use his best endeavours
www.tshivhaseinc.com
can have regard to his own financial
interests will depend very much on
the nature and terms of the contract in
question.” [At Para [32]. In the Jet2 Case,
Moore-Bick LJ decided that the nature
of the letter agreement between Jet2
and BAL was such that the ability of Jet2
to operate outside normal hours was
essential to Jet2’s business and therefore
fundamental to the letter agreement.
He said that the parties would not have
contemplated that BAL would restrict the
operation of Jet2 outside normal hours
because of its incurral of losses.
It is interesting to note that according
to Lewison LJ’s dissenting judgment,
clause 1 of the letter agreement was too
vague and uncertain to be enforceable.
Although “best endeavours”,
“all reasonable endeavours” and
“commercially reasonable endeavours”
are used extensively in South Africa, no
South African court has interpreted the
measure of performance required in
terms of these phrases. The Jet2 Case
highlights the risk of using these phrases
without an appreciation of what they
mean in the context of an agreement
being negotiated or drafted. When
negotiating and drafting agreements, an
effort should always be made to ensure
that the parties record what they have
agreed to in relation to the extent of the
obligations that are imposed rather than
agreeing to endeavour obligations which
sound innovative when drafted but can
be opaque when interpreted.
Disclaimer: This newsletter is provided for general information only and does not constitute legal or other professional advice. Appropriate
legal or other professional advice should be obtained before taking or omitting to take any action in respect of any specific issue. Tony
Tshivhase Incorporated, its employees and directors accept no liability whatsoever for any loss or damage which may arise from reliance
on information contained in this newsletter. To the extent that this newsletter contains links to websites other than the Tony Tshivhase
Incorporated website, Tony Tshivhase Incorporated has no responsibility for any websites other than its own, and does not endorse the
information, content, presentation or accuracy, or make any warranty, express or implied, regarding any other website.
2
| NewSLETTER | JULY 2012