CONTRACT — Construction — "Reasonable endeavours" — Sale of business — Obligation on parties to use "reasonable endeavours" to obtain consent of third party to novation of contracts — Third party not consenting to proposed novation — Defendant failing to persuade third party to change mind — Whether defendant in breach of obligation — Meaning and scope of "reasonable endeavours"

Rhodia International Holdings Ltd and another v Huntsman International LLC [2007] EWHC 292 (Comm)

QBD: Julian Flaux QC sitting as a deputy High Court judge: 21 February 2007

A contractual obligation to use “reasonable endeavours” was less stringent than one to use “best endeavours”. Mr Julian Flaux QC, sitting as a deputy High Court judge in the Commercial Court, so observed when finding that the defendant, Huntsman International LLC, had failed to discharge its obligation, under a contract to purchase a chemical surfactants business from the claimants, Rhodia International Holdings Ltd and Rhodia UK Ltd, to use its “reasonable endeavours” to obtain the consent of a third party, National Power (Cogeneration) Ltd, to the novation of an contract for the supply of energy to the business site.

JULIAN FLAUX QC said there was some debate at the hearing as to whether “reasonable endeavours” was to be equated with “best endeavours”, a question on which there seems to be some division of judicial opinion. As a matter of language and business common sense, untrammelled by authority, one would surely conclude that they did not. This was because there might be a number of reasonable courses which could be taken in a given situation to achieve a particular aim. An obligation to use reasonable endeavours to achieve the aim probably only required a party to take one reasonable course, not all of them, whereas an obligation to use best endeavours probably required a party to take all the reasonable courses he could. Accordingly, in so far as it was necessary to decide the point, his Lordship agreed with counsel for the defendant that an obligation to use reasonable endeavours was less stringent than one to use best endeavours.

Appearances: Thomas Beazley QC and Andrew Green (DLA Piper) for the claimants; Antony Edwards-Stuart QC and Charles Pimlott (Dickinson Dees, Newcastle) for the defendant.

Reported by: Benjamin Urdang, barrister