The latest on all reasonable endeavours

Brooke Homes v Portfolio Property Partners (High Court) [2021]

‘Endeavours’ commitments of different varieties in contracts are commonplace but they are often recipes for uncertainty and disagreement. The courts have, as a result, had several attempts at trying to spell out what sort of commitment they represent and this case was the latest example.


The claim arose out of the proposed development of land to the North-West of Bicester, in Oxfordshire. The P3 Group built up a portfolio of land for development and, on 31 December 2014, submitted its application for outline planning permission. The P3 Group then set about finding a developer for the project. The claimant (Brooke) was identified as a suitable developer. In April 2015 the parties formalised their relationship by entering into a Heads of Agreement coupled with an ‘Exclusivity Agreement’ (the ‘Heads’). The Heads were expressly stated to be ‘considered binding by both parties’. They went on to say:-

“Good faith: Each party shall act in good faith throughout the period of this Agreement".

“The parties shall use all reasonable endeavours to enter into a final binding Conditional Sale Agreement [CSA] which captures legally these Heads of Agreement acting in good faith towards each other”.

Crucially, it was also agreed in the Heads under the title "Mutual Benefit” that “The transaction will be structured in a manner which will most effectively achieve the desired commercial and financial outcome for both parties”.

Despite the grant of outline planning permission for the wider scheme in March 2017, the parties failed to conclude the CSA. Brooke issued proceedings against the P3 Group complaining that it was in breach of contract and claiming damages.


The judge started by making it clear that the frequently used term ‘joint venture’ is not recognised in English law as a distinct legal concept or term of art. The term "joint venture" is little more than short-hand for a specific commercial project or activity pursued by two or more participants. It does not indicate a particular legal structure or specific obligations and duties. The nature of the ‘joint venture’ in this case was to be found by an analysis of the commercial agreements between the parties.

The court identified 3 types of ‘endeavour’ clauses. The first is an obligation simply to use reasonable endeavours about which the court said, “if one reasonable path is taken then the obligation is discharged”. The second is an obligation to use all reasonable endeavours. The court noted that this is normally interpreted as requiring all reasonable avenues to be exhausted and that, in this respect, there may be little difference between such a clause and a duty to use best endeavours. However, the court acknowledged that some best endeavours clauses might require the sacrifice of some commercial interests on the part of the obliged party, whereas an obligation to use all reasonable endeavours is probably less likely to do so. The court said that the exact requirement will depend on the precise wording and context in which that wording arises. In some circumstances even with "all reasonable endeavour” clauses, some subordination of commercial interests may be required. The mutual benefit clause in this case was said to have some bearing in this context.

Active endeavour is required on the part of the parties where all reasonable endeavours are required: passivity or inactivity is likely to be construed as a potential breach. And if a reasonable course of action is identified by the claimant, then the defendant can be required to explain why it was not required to [follow it].

The question whether the taking of a particular path is a reasonable endeavour is subject to assessment by the court of whether it would have had a significant or substantial chance (‘real prospect’) of achieving the desired result.

A significant issue here was the fact that the object of the endeavours obligation was the negotiation and agreement of a new agreement. Ordinarily, this would not be enforceable as an ‘agreement to agree’ (following Walford v Miles – a House of Lords case from 1992). However, this was apparently not argued on behalf of the P3 Group in this case. The court said that “in commercial dealings where the parties have acted in the belief that they had a binding contract, the courts are willing to imply terms, where that is possible, to enable the contract to be carried out. The courts will assist the parties to preserve rather than destroy bargains, on the basis that what can be made certain is itself certain. The courts will now be willing to recognise an obligation to negotiate on some matter using reasonable endeavours, or in good faith, where it is found in a binding agreement”.

The judge summarised the express duty of good faith to require four things:

i) A duty to act honestly, judged by reference to reasonable and honest people;

ii) The observance of reasonable commercial standards of fair dealing;

iii) Fidelity or faithfulness to the common purpose, or contractual purpose; and

iv) More generally, to act consistently with the justified expectations of the parties.

The fourth element was said to play a similar role to the implication of terms [by the courts], and to [act] as a ‘gap filler’.

According to the court, the ‘mutual benefit’ clause did not require the obligated party to ignore their own commercial interests, but it did require that they also have regard to the other party's commercial interests, to mutual benefit, and also the overall desired outcome. In the context of variations to the Heads, it said if one party requests a reasonable variation which is of no, or no substantial detriment, to the other party, but can clearly be seen to be of benefit to other party, and to achieving the desired commercial and financial outcome for both parties, for mutual benefit, then the parties were expecting each other to agree to the same. This also, in this case, has a bearing on the assessment of whether or not all reasonable endeavours or good faith obligations have been discharged.

The judge concluded that, on the facts (which are very case specific and therefore not worth reciting here), the P3 Group had failed to comply with the all reasonable endeavours obligation to negotiate and conclude the CSA and was therefore liable for substantial damages.

Points to Note:

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