Reasonable endeavours

Gaia Ventures v Abbeygate (Court of Appeal) [2019]

Many contracts routinely contain obligations to ‘endeavour’ to do something. These seem to give rise to disputes quite frequently as to the precise extent of the obligation. This case is the latest example.


On 4 July 2003 Abbeygate entered into a contract with Planet Ice for the purchase of two ‘Ice Rink Leases’ for the sum of £1.5m. Abbeygate covenanted to pay to Planet Ice an additional sum of £1.4m not later than 10 working days after any ‘Trigger Date’ (as defined). The relevant Trigger Date was defined as "… the Date of an Acceptable Planning Permission… ". However, the definition was subject to a proviso that "no date more than ten years after the [date of the transfer] will be a Trigger Date". The longstop Trigger Date was therefore 4 July 2013.

Another clause imposed on Abbeygate an obligation to

"… use its reasonable endeavours to obtain an Acceptable Planning Permission having regard to the advice of its consultants including Planning Counsel of at least five years standing from time to time and it shall not be obliged to do so [if] it is advised that it does not have a greater than 60% prospect of success."

Finally, there was an additional obligation which required Abbeygate to use reasonable endeavours to acquire certain leases and the freehold of the site as soon as reasonably practicable (an essential pre-condition to fulfilling the planning condition requirement).

Abbeygate contended that obligations in these terms entitle the covenantor to have regard to its own commercial interests when deciding what steps to take. It was accepted that the relevant condition had not been satisfied before the longstop Trigger Date. However, the claim was that had Abbeygate used reasonable endeavours the condition would have been satisfied in time.


In the High Court the judge held that “reasonable endeavours were not made [so as] to satisfy the [relevant condition]”. Abbeygate manipulated the conditions in various agreements in order to benefit its own cash flows and thereby avoid the requirement to make the additional payment.

The Court of Appeal reviewed the law on different types of ‘endeavours’ commitments. The obligation in an earlier case of Alghussein was one to use best endeavours (not reasonable endeavours) to commence and proceed diligently with the development in accordance with "the licences and permissions obtained as soon as reasonably practicable after the grant of such consents". The court in that case said “This supports the view that only technical rather than financial considerations should be relevant to determining when it was reasonably practicable to begin and complete the development”.

Ultimately the High Court judge was held to have decided the case on the facts (and therefore there was no mistake in law for the Court of Appeal to overturn) namely that Abbeygate had devoted its energies (at least in part) to ensuring that the fulfilment of the conditions would not be achieved until after the date when it would escape liability to make the additional payment. Its delay was motivated (at least in part) by a desire to avoid the additional payment. The restriction on access to funding was self-imposed and therefore it had not used ‘reasonable endeavours’. It was therefore not necessary for the Court of Appeal to express a final view about whether financial considerations could be taken into account when assessing whether a reasonable endeavours commitment has been fulfilled and it therefore did not do so. This is unfortunate.

Points to Note:

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