Parties often try to qualify their obligations under a contract by using ‘endeavours’ clauses, by which a party will need to use anything between ‘reasonable endeavours’ at the lower end of the spectrum and ‘best endeavours’ at the higher end to try to perform an act. In this case, the qualification of ‘all reasonable endeavours’ was used, which falls somewhere in between reasonable and best endeavours. What a party is actually obliged to do under an endeavours clause will depend on the content and context of the agreement and the situation as a whole – no concrete interpretation has been accepted for all contracts. As such, it is often the case that an ‘endeavours’ clause could end up before a court because the parties to an agreement cannot agree on its interpretation.
In this case, the parties had entered into a contract under which Blackpool Airport Ltd (BAL) had to use all reasonable endeavours to provide a low cost base for Jet2, and under which both parties had agreed to use best endeavours to promote Jet2’s low cost services from BAL. The parties agreed before the case that the court should consider, for this case, the best endeavours and all reasonable endeavours clauses used in the agreement to have the same meaning i.e. that they should both be considered all reasonable endeavours clauses. Neither party obtained significant legal advice on the provisions of the agreement before entering into it.
The agreement did not specify the operating hours of the airport. Initially, the airport opened or stayed open outside of its published operating hours for early or late flights respectively, as it seemed common ground between the parties that Jet2 needed flexibility to operate. However, BAL made an operating loss over that period and, after four years, refused to accept flights that were scheduled for arrival or departure outside of its published operating hours, giving Jet2 just one week to comply.
Jet2 issued proceedings against BAL for breach of contract. BAL argued that its ‘all reasonable endeavours’ obligation did not oblige it to act against its own commercial interests – i.e. to allow the flights to continue to run outside of its operating hours despite the airport making a loss as a result.
The High Court ruled that BAL had breached the agreement, rejecting BAL’s justification of protection of its commercial interests. The High Court ruled that the initial intention of the parties in the agreement could not have been for BAL to change what it did on an ongoing basis based on what profit it was making as a whole – this profit was affected not just by Jet2’s flights, but also by a number of other problems it faced. The High Court stated that those other problems should have been considered in a risk assessment by BAL before entering the agreement, and did not justify BAL restricting or stopping performance of its obligations under the agreement if it became unprofitable.
The High Court distinguished this case from other cases concerning endeavours clauses as the relevant clause here related to matters all within BAL’s control i.e. whether or not to schedule flights outside its published operating hours. Other cases in this area tend to be where the clause relates to matters outside of the relevant party’s control, and in such instances a party would be justified in not risking its commercial interests in an attempt to achieve a result outside its control. In this case, BAL was not justified as the result was entirely within its control.
This case is another instance where obtaining legal advice and ensuring stricter drafting of the agreement could have saved both parties significant amounts of time and money. It is always better to have an express obligation in an agreement rather than an obligation qualified by an endeavours clause, as it allows much less scope for arguments on interpretation. If the operating hours of the airport had been specified in the agreement from the outset, a dispute of this magnitude could have been avoided.
