31 July 2018 - Post by:Jason Rix
The High Court has held reasonable endeavours clauses require a detailed factual investigation, making them unsuitable for summary judgment (Insurance Medical Reporting v Your Lawyers Ltd).
Insurance Medical Reporting provided medical reports to a law firm called Your Lawyers Ltd which specialises in personal injury claims. The parties had entered into an a credit agreement where Your Lawyers promised to pay IMR’s invoices for medico-legal reports within 30 days of receiving a costs order or settlement agreement in the legal action where the medical report had been provided. Your Lawyers promised to use “reasonable endeavours to… provide to [IMR] in a timely manner, such information as [IMR] may reasonably require”. IMR alleged that, in breach of these provisions, Your Lawyers had declined to provide information about whether it had received a costs order or reached settlement in 1,310 claims, and had failed to pay outstanding invoices of approximately GBP1.5 m. IMR applied for summary judgment on its claim.
The court was not addressed on the meaning of reasonable endeavours so it looked at Chitty on Contracts and Lewison on the Interpretation of Contracts. It was apparent from those texts that, in determining the extent of a reasonable endeavours clause, the court should have regard to the financial circumstances of, and resources available to, the performing party. Moreover where one party has taken some steps, but the other alleges that they are insufficient to comply with the reasonable endeavours clause, then a factual investigation is inevitable. For these reasons the summary process was not appropriate.
While endeavours clauses are very useful commercially, this is an illustration of their limitation.