Commercial Law – Contract Construction – ‘Reasonable’ & ‘Best’ Endeavours

The recent case of Rhodia International Holdings Limited and Rhodia UK Limited v Huntsman International LLC [2007], provides new guidance on a long-disputed area of contract law. According to the judgment of the High Court, a duty to exercise ‘reasonable endeavours’ requires less than ‘best endeavours’ but can still demand a party to act against its own commercial interests, although the case does not resolve all the uncertainty surrounding the difference between ‘reasonable’ and ‘best’ endeavours.

The case confirms that ‘reasonable endeavours’ is a less stringent obligation than ‘best endeavours’ – a concept which is commonly assumed. The case also confirms that a ‘reasonable endeavours’ obligation may be discharged by exhausting just one of a number of possible solutions, whereas a ‘best endeavours’ obligation requires all avenues to be explored.

Huntsman International LLC (“Huntsman”) had agreed to buy Rhodia International Holdings Limited and Rhodia UK Limited (“Rhodia”), a chemicals company. As part of the sale and purchase agreement both parties were to use reasonable endeavours to ensure that all supplier contracts passed from Rhodia to Huntsman, including one with a power company called Cogen.

However, Cogen refused to accept the transfer of the contract without a guarantee from Huntsman’s parent company. The argument over what was meant by reasonable endeavours focussed on Huntsman’s refusal to provide that guarantee. That refusal therefore affected the transfer of the contract with Cogen for the supply of power.

Huntsman paid for the power from the date of its purchase of Rhodia in 2001 until 2004. However, in 2004 Huntsman told Rhodia that it was pulling out of the location and that responsibility for the power contract remained with Rhodia until the contract expired in 2009. Huntsman submitted the reason for this being that the contract for the supply of power had not been transferred. Cogen claimed that £14.8m worth of power and services was owed, and the case concerned Huntsman and Rhodia arguing over who owed Cogen that amount.

The case was eventually decided on what constituted ‘reasonable endeavours’ to ensure the contract transferred from one company to the other. It was ruled that Huntsman International had breached the sale agreement by not using its reasonable endeavours to provide a guarantee for a power contract. Julian Flaux QC, sitting as a deputy High Court Judge in the case said:

“An obligation to use reasonable endeavours to achieve the aim probably only requires a party to take one reasonable course, not all of them, whereas an obligation to use best endeavours probably requires a party to take all the reasonable courses he can. In that context, it may well be that an obligation to use all reasonable endeavours equates with using best endeavours…”

The ruling in the case made it clear that the terms of the sale contract were binding, even if its terms no longer suited one of the parties. The companies must abide by their contractual obligation to make a reasonable endeavour even if it is against their company interests.

However, there are other authorities which suggest a slightly different viewpoint. In the absence of a specific course of action assumed by a party in the context of a reasonable or best endeavours obligation, neither obligation is likely to require a party to sacrifice it own commercial interests. It appears from the other authorities – which were not discussed in this case – that ‘reasonable endeavours’ may not even require the party giving such an obligation to act to its own disadvantage. This would suggest that relatively little effort is required to comply with a ‘reasonable endeavours’ obligation.

As far as the drafting of contracts is concerned, the best way to achieve certainty would be to specify the actions a party must take in using its ‘best’ or ‘reasonable’ endeavours wherever possible. The relevant party will then be bound to take those actions in any event and the question of whether those actions are contrary to that party’s commercial interests will not arise.

© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

Crucial Steps to Take During Your Search for the Perfect Bankruptcy Lawyer to Represent You in Court

Considering how our lives have become so dependent on credit cards for every little purchase, it becomes very easy for people to lose track of how much money they owe and before they know it they get buried in so much debt that they find it impossible to recover from it. This is not only limited to people but carries on to businesses and organizations as well. The borrowing and lending of money and the purchase and selling of goods on credit are the main reasons which lead to excessive debt. This is why we have bankruptcy laws to help people recover from excessive debt and start fresh. But the laws of bankruptcy are quite complicated and in order to file for bankruptcy you need to have a competent bankruptcy lawyer to help you out.

To begin with, the very first step that you need to take before filing for bankruptcy is to hire an experienced bankruptcy lawyer. This step though might appear to be very simple; it is in fact the main step that will determine how your bankruptcy case unfolds in court and how likely you will succeed in it. The bankruptcy lawyer you choose is your future and therefore you need to take the utmost care and caution when choosing which bankruptcy lawyer to hire to represent you in court. This article is written to specifically help you out in this step. You will get to know all the steps required for you to successfully hire the best bankruptcy lawyer for you.

The first source to look into for bankruptcy lawyer referrals is either your friends or any other lawyer that you may know. If you do not know of any person who is a lawyer or any person who knows a lawyer than the second source to look into for a bankruptcy lawyer is the yellow pages. This is a convenient and quick way to get a name of a bankruptcy lawyer working in your area. The yellow pages usually list all lawyers according to their specialty therefore looking into the bankruptcy section will immediately give you a list of all bankruptcy lawyers in your area.

The next step involved in your search for a good lawyer is to start gathering some background information on the names you have in your list. Background information can easily be found on any lawyer through the internet. If not you can call up the court and ask them for a review on the lawyer you are interested in. Check out for which bankruptcy related lawyer has the most number of successful cases and which bankruptcy related lawyer has the longest work experience of practicing particularly in your area and your local court rather than in any other state. If a bankruptcy lawyer has a longer experience in another state then avoid hiring him or her because the laws and regulations change a lot from state to state and that bankruptcy lawyer might not have sufficient information to represent your case.

Once you narrow down your list to two or three lawyers then start calling up each bankruptcy related lawyer and ask them to allow you to visit them for a consultation session. These consultation sessions are normally free. If a bankruptcy related lawyer is charging you for it, avoid him or her. This initial session with a bankruptcy related lawyer will help you make the final decision of which bankruptcy related lawyer to finally hire depending on which one you are the most comfortable with. Comfort is a major factor because in the coming days you will be spending a lot of time with this new bankruptcy related lawyer, therefore always ensure that you are fully comfortable with him or her.

Safe Gun Storage Federal and State Laws

Safe gun storage laws are in effect in most all States to prevent accidents in homes especially where children are involved. The ATF (Federal Bureau of Alcohol, Tobacco and Firearms) has a mandate in place for gun selling facilities which states that firearms are to be secured in safes or have trigger locks installed to prevent firing. The selling establishment has to sign a certification form that they comply by this law. This law is required by all states.

Just to mention a few of the state’s safe gun laws, in Texas, as well as other states, a firearm sales facility has to place a sign somewhere visible to all customers buying rifles, shotguns and pistols in their store that says ” It is unlawful to store, transport, abandon an unsecured firearm in a place where children are likely to be and can obtain access to the firearm” (information taken from The Firearm Laws of Texas) or a similar statement.

In New York State, all retailers that sell firearms to customers, whether they are new or used, must provide some type of locking device with their purchase such as trigger locks, cable locks, etc. These locks do not need to be installed when sold and each device must meet certain requirements that prevent firearms from being fired. This law does not apply to sales between dealers. New York does not require buyers to secure their firearms with these devices but it is highly recommended they do. Firearm owners should check with their local authorities to determine if there are any local ordinances require otherwise. There are codes within the state that states it is a criminal violation punishable by up to 10 days imprisonment and/or a fine up to $250 for any owner to store or leave a firearm in such a manner that is out of their immediate possession or control, without making the weapon inoperable by installing a safety locking device.

While these required types of locks do protect firearms from being fired, they do not prevent them from being stolen once the buyer places them in their home. Gun cases and wood gun racks do not deter gun theft and do not qualify as safe storage. They should be secured in locking devices such as locking gun racks, firearm safes, etc. to add extra security.

Several states have passed laws that make firearm owners criminally liable if someone is injured because a child gains unsupervised access to a gun and can issue fines or jail time where children are involved depending on the circumstances.

Florida, as well as other states, has several laws and regulations regarding safe gun storage in homes as well as in vehicles. The state of Florida’s major concern is the safety for children. Anyone in violation of improper storage of firearms where children can have easy access could be subject to up to 60 days in jail and a $1000 in related fines.

The state of California, like in most all other states, requires all firearms be stored in a safe and secured manner. They also require all retail sales of firearms include a Department of Justice locking safety device or proof that the purchaser owns a firearm safe that meets regulatory standards established by the department. The types of approved devices can be found on the Department of Justice’s website…

Since State laws are constantly changing, this article is for general information and not for official use. You can check with your state and local authorities for current updates pertaining to safe gun storage laws.

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