The phrase ‘all reasonable endeavours’ is found in many commercial contracts and, unfortunately, the law has not always provided adequate guidance as to the obligations the term imposes. The extent of the obligations required by ‘all reasonable endeavours’ has recently been considered by the High Court.
CEP Holdings and CEP Claddings (CEP) are suppliers of building materials to construction companies. They entered into a distribution agreement with Steni AS to be their exclusive distributors in the UK. Steni sent a termination notice to CEP some six years later, one of the reasons being a failure to use ‘all reasonable endeavours’ to market and sell Steni’s products.
The court found that CEP had not used all reasonable endeavours. This was not due to one particular failure, but resulted from a series of minor breaches that cumulated in the failure to discharge its obligations under the clause. The failures included: a considerable drop in sales figures, when the market trend showed that sales were rising; a failure to communicate with Steni; margins that were higher than others, which made them less competitive, and a failure to market Steni properly, for example by not publicising material and not attending trade fairs.
Helpfully, the court also gave some guidance as to what actions it considered would have been required by CEP to exhaust its ‘all reasonable endeavours’ obligation. These were: the use of a detailed marketing plan and sales forecasts; making use of the marketing materials provided; communicating with Steni, for the common purpose of maximising sales and promotion, and ensuring that its sales team was performing adequately.
The full judgment can be found here.