ARTICLE · 10 MARCH 1999

Best and reasonable endeavours

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You are a director of Alpha plc which has entered into a share purchase contract for the acquisition of Beta plc. The transaction is subject to the approval of Alpha's shareholders and the Board has undertaken to use its "best endeavours" to ensure that such consent is obtained. However, prior to the extraordinary general meeting you discover that, due to legislative changes, the acquisition of Beta is no longer in the interests of Alpha. Does the best endeavours covenant given by Alpha mean that it will be in breach unless you take steps to obtain shareholder approval, even though it is commercially imprudent for you to do so?

Best endeavours

The requirements of a best endeavours obligation is a duty to do what can reasonably be done in the circumstances. "The standard of reasonableness is that of a reasonable and prudent board of directors acting properly in the interests of their company" (Terrel -v- Mabie Todd & Coy Ltd [1952] 69 RPC 234). Given that the acquisition of

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