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In a recent Court of Appeal decision, Blackpool Airport was held to have been in breach of an obligation to use best endeavours in relation to promoting Jet2's business and the Court made it clear that, in appropriate circumstances, such an obligation may well require a party to act to its own commercial detriment.
The parties had entered into a 15 year contract in the form of a letter agreement. Clause 1 of this agreement stated that there was:
"An obligation on both parties to cooperate together and use their best endeavours to promote Jet2.com's low cost services from Blackpool Airport."
For the first four years, BAL allowed Jet2 to arrive and depart outside the normal operating hours of 6am to 8pm. In an attempt to improve its profitability, BAL then refused to accept flights outside such hours and gave Jet2 just one week to change its schedules. As a result of the best endeavours clause, the key question before the Court was whether BAL was under an implied obligation to accept flights from Jet2 outside the standard operating hours, when there was no express term requiring this and it would damage BAL's commercial interests.
In reaching the decision to uphold Jet2's claim and holding that BAL was required to accept flights outside the normal operating hours, there were a number of factors at play:
One of the Court of Appeal judges dissented and felt that there was no implied term to accept flights outside of the normal operating hours of the airport on the basis that the clause was too uncertain to be interpreted properly by a Court. He followed a more traditional approach by arguing that, given the number of express obligations set out in the agreement, the absence of an express right for Jet2 to operate outside normal operating hours indicated that this was not a contractual term that could be implied. By contrast, the other judges involved in this case felt that the basic obligation was sufficiently certain to be given legal effect, although the test for an alleged implied term was a difficult one for the Court to evaluate.
The decision in this case supports the recent trend whereby English Courts are keen, wherever possible, to uphold an agreement between parties to use reasonable or best endeavours to achieve a particular objective. Those negotiating and drafting commercial contracts should also bear in mind that:
John Warchus, Partner, Clarkslegal LLP
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