The phrases “to use all reasonable endeavours” and “to act in good faith” are legal terms that can often be found in contracts. But what do they actually mean? This was a question which the Court of Appeal had to consider in the case of Bristol Rovers v Sainsbury’s Supermarkets.
Sainsbury’s had agreed to buy Bristol Rovers’ Football Club’s ground, the Memorial Stadium, and to lease it back to the Club while a new stadium was being built. Sainsbury’s would eventually demolish the stadium and build in its place a mixture of residential units and a supermarket.
However, the agreement was conditional upon Sainsbury’s obtaining planning permission which, amongst other things, permitted it 24 hour access for deliveries. It was contractually obliged to act in good faith and to use reasonable endeavours to obtain the planning permission.
The planning permission granted to Sainsbury’s restricted the hours upon which it was allowed to deliver to the proposed store. Following a failed appeal, Sainsbury’s asserted that it was entitled to terminate the agreement. Bristol Rovers argued that Sainsbury’s could not do so as it had failed to use “reasonable endeavours” to obtain planning permission since it had not exhausted the local council’s appeals procedure.
At first instance the High Court Judge found that Sainsbury’s was entitled to terminate the agreement. Bristol Rovers therefore appealed.
One of the issues which the Court of Appeal had to decide was whether the refusal by Sainsbury’s to allow Bristol Rovers to launch a further planning appeal in its own name was in breach of the agreement and, in particular, its obligation to use all reasonable endeavours to procure an acceptable planning permission and to act in good faith under the agreement. The Court found that it did not; the parties’ obligations to act in good faith did not require Sainsbury’s to consent to Bristol Rover’s pursuing its own planning appeal. As the application for planning permission only applied to Sainsbury’s, its lack of consent to allow Bristol Rovers to apply did not amount to a failure to act in good faith. The Court was of the view that, given that Sainsbury’s itself was not obliged to make a further planning appeal it could not have been the intention of the parties that Sainsbury’s should be obliged to consent to such an appeal by Bristol Rovers.
This case illustrates how detailed drafting in a contract can reduce uncertainty about the scope of endeavours and good faith obligations. If the parties intend for certain steps to be taken then these should be expressly set out in the contract. Relying on general endeavour obligations or good faith obligations may not achieve what the parties actually wanted in the first place.