Overview

CPC Group Ltd v Qatari Diar Real Estate Investment Company has brought back into the spotlight the implications of ‘endeavours’ clauses that are used to soften absolute contractual obligations by requiring the obligated party to use only a certain level of effort to fulfil the obligations.

In the CPC case, CPC Group Ltd (CPC) agreed to sell Qatari Diar Real Estate Investment Company (Qatari) its interest in a joint venture company which had been formed to buy and develop the Chelsea Barracks site. At the date of the sale, the joint venture company had applied for planning permission for the site but it had not been granted. Under the sale and purchase agreement, Qatari was placed under an obligation to use ‘all reasonable but commercially prudent endeavours’ to achieve certain financial thresholds for the site, mainly dependent on progress being made in the planning application, at which point CPC would receive further deferred consideration.

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