Reasonable endeavours and best endeavours in IT Contracts – what’s it all mean?
Do you freely sign on the dotted line without fully understanding your IT contracts?
You’re certainly not the only one. But go easy there, tiger, or else you might find yourself sitting on the wrong side of a Court room. The good news is, it gets a whole lot clearer when you understand the terms “reasonable endeavours” and “best endeavours”. So read on as we endeavour to explain the endeavours.
First things first, there are two kinds of obligations in a contract:
1. What you must do.
2. What you aim to try and achieve.
The first one is straightforward. Where a clause states that a party must do something, well, they must do it. That is, the obligation upon that party is absolute. And if the obligation isn’t performed, then the contract is breached.
The second type of obligation gets a little bamboozling. You see, the parties’ intention to try is what is described as a qualified term. And these types of clauses will usually read a “party will use all reasonable endeavours to ….” or you “must use best endeavours to ….”.
While the clause still might contain the word must, the obligation has a qualification. The qualification indicates that rather than there being an absolute requirement to perform, there’s only a requirement to use a necessary amount of effort in attempting to perform. It’s the “reasonable” effort that you put into practice. In other words, you tried your best.
Best endeavours vs reasonable endeavours
Isn’t it confusing when two legal terms actually mean the same thing? Welcome to best endeavours and reasonable endeavours.
In Australia, the Courts see “best endeavours’ and “reasonable endeavours” as the same thing. In Court speak, an obligation to use “best endeavours” does not require a person to go beyond what’s reasonable. Therefore, a “best endeavour” is really measured by what’s reasonable in the circumstances.
But how on earth do I determine what’s reasonable?
“Trying your best” is up for interpretation, right?
Thankfully, the Courts have a system. The Courts consider, what would a reasonable observer (an objective person) expect from the party obliged to use reasonable endeavours? The Courts also ask: what could have reasonably been done in the circumstances?
For a party to be confident it has used all reasonable endeavours, it must be sure that any additional efforts to fulfill their obligation would have had such a remote chance of success it would simply be a waste of time.
But at the end of the day, the Courts will consider what the party’s capability to perform is.
Setting ground rules: adding terms of reasonableness
Because determining what’s reasonable can make your brain boil over, it is preferable to actually stipulate it in a contract.
For example, many IT service providers agree to use all reasonable endeavours to prevent unauthorised access to the system.
But without including any framework, it’s difficult for both parties to be sure whether or not the service provider complied with their obligations. Therefore, terms in the contract can indicate what effort the supplier must make to supply the services. It can also be helpful to include specific parameters that would be considered reasonable, like a reference to industry standards or examples of the specific type of security measure.
A note on evidence
As the saying goes, evidence is king (that’s not actually a saying, but it should be).
Here’s an example of evidence:
IT service providers often agree to use all reasonable endeavours to notify the customer of any planned downtime. Evidence of this includes keeping records of when internal decisions were made that resulted in a planned outage, all the attempts made to notify the customer about the outage (including method, date and time).
While arguments over what’s reasonable aren’t going away, it’s essential that you can show that there was some effort. Keeping evidence of your attempts to perform will always be useful to support your case that you have used all “reasonable endeavours”.
If we consider the example above, you will be in a far better position to show you have taken reasonable endeavours to notify if you have email evidence of the notifications, file notes of any telephone conversations with the customer, or a log from the system which has the details of any in application notifications.
Sure, it takes a little bit of effort to keep your evidence together. But far less effort than being on the wrong side of a Court case. Moral of the story: get to know your endeavours before you sign.
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