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27th July 2012

Precisely what is reasonable?

27th July 2012

Precisely what is reasonable?

David Eminton

Posted: 27th July 2012

T: 023 8048 2284

E: Email Me

Obligations to use “reasonable endeavours” to achieve a desired end have come under close scrutiny over the last few years. This has often been the result of parties assuming contractual obligations which, as a result of the economic downturn (and other related factors) it becomes difficult or undesirable to achieve.

Ampurius Nu Homes Limited v Telford Homes concerned a construction company (Telford Homes) which had agreed with a developer (Ampurius) to construct a series of residential blocks on land owned by Ampurius.  Telford contracted to use reasonable endeavours to procure the completion of the works by a specified date.

Telford were unable to secure funding to carry out the building works and failed to complete them by the date specified in the contract.

The High Court formed a view which, on the basis of the facts as reported, might be considered to be a harsh one. The lack of funding was not something which could or should be taken into account in determining whether Telford had used an appropriate level of endeavours to achieve the completion date specified.

The question of whether “reasonable endeavours” had been used was something to be determined by reference to the physical conduct of the works for which Telford were responsible.  In construing the obligation therefore it was to be assumed that Telford had the various technical means and financial resources in order to carry out the work.

It isn’t obviously apparent that the decision in the Ampurius v Telford case is consistent with other recent judgments handed down where obligations to use varying levels of endeavours were considered (as referred to in earlier blogs).  This case emphasises the fact that this is an area which will continue to produce litigation. Parties assuming obligations to use endeavours to achieve specified ends will need to consider carefully what resources they will need to have access to in order to achieve those ends and whether the absence of any such resources will be taken into account in determining whether or not appropriate endeavours have been used.

If you wish to discuss any of the issues raised in this blog please contact David Eminton at david.eminton@parissmith.co.uk

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David Eminton

Posted: 27th July 2012

T: 023 8048 2284

E: Email Me