An obligation to use endeavours within a contractual relationship has once again been in the legal press, this time in the case of Gaia Ventures Limited v Abbeygate Helical (Leisure Plaza) Limited.
The case concerned a development site where the developer assumed an obligation to use reasonable endeavours to take steps as soon as reasonably practicable. Once the conditions to which the endeavours related were satisfied, an overage payment of £1.4 million would become due to Gaia.
The relevant conditions weren’t satisfied and the interpretation of the contractual obligations assumed by Abbeygate came before the Royal Courts of Justice last year.
Gaia argued that Abbeygate worked to a timetable which would have had the effect of the conditions being satisfied outside of the timeframe within which the overage would become due.
The Court concluded that if there had been a desire to do things as soon as reasonably practicable, its highly probable the relevant conditions would have been satisfied sooner and overage would have been payable. The Court therefore concluded that Abbeygate was in breach of its contractual provisions. Damages equivalent to the overage payment of £1.4 million were awarded.
The case doesn’t create new law but it does emphasise that an obligation to act reasonably and within a reasonable timeframe requires a party to take at least one course of action (which might be considered to be reasonable). The case restates that an obligation to do things as soon as reasonably practicable means precisely that and not when convenient or at a time best suited to the party subject to the obligation.
You may be interested in reading a previous blog we wrote on “endeavours” last year.
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