Does a duty to use “reasonable endeavours” to overcome a force majeure event require a party to accept non-contractual performance? In RTI Ltd v MUR Shipping BV [2024] UKSC 18, the Supreme Court unanimously held that it does not. The decision restores a welcome degree of doctrinal coherence to the law of force majeure, reaffirming the sanctity of contractual terms against the encroachment of result-oriented pragmatism.
The facts were these. MUR (the shipowners) entered into a contract of affreightment with RTI (the charterers) for the carriage of bauxite. The contract stipulated payment in US dollars. Following the imposition of US sanctions on RTI’s parent company, dollar transfers became effectively impossible. MUR invoked the force majeure clause, suspending performance. RTI rejected the notice, offering to pay in Euros and to indemnify MUR for any exchange rate losses, thereby ensuring MUR received the intended economic value. MUR refused, insisting on its contractual right to payment in US dollars. The issue of was whether the “reasonable endeavours” proviso in the force majeure clause compelled a party to accept non-contractual performance to “overcome” the impediment.
Lord Hamblen (with whom Lords Hodge, Lloyd-Jones, Burrows and Richards agreed) held that “reasonable endeavours” does not require the acceptance of non-contractual performance. The object of the proviso is to maintain the contract, not to rewrite it.
Interpretation as a matter of principle
Lord Hamblen acceded to the view that the interpretation of the clause should be approached as a “matter of principle” (at [29]). While the specific wording of any clause is paramount, the phrase “reasonable endeavours” to “overcome” an impediment is standard boilerplate. As such, it acts as a term of art, importing a meaning consistent with the general law rather than one shaped by the specific factual matrix.
It is suggested that this approach is sound, though it may represent a quiet departure from the strictures of Wood. Lord Hamblen notably eschewed the granular “unitary” exercise undertaken by Males L.J. in the Court of Appeal ([2022] EWCA Civ 1406), declining to rehearse what a reasonable person would have understood the specific text to mean in its specific context. The implication is that where parties employ standard commercial boilerplate, they intend to rely on established contract law principles. However, this rationale remains tacit; the judgment prioritises legal certainty over contextual nuance without explicitly articulating the doctrinal basis for doing so.
Causation and the object of the proviso
Lord Hamblen’s analysis turned on the causal purpose of the clause. Force majeure clauses are concerned with the causal effect of impediments to contractual performance (at [38]). The impediment in this case was the inability to pay in US dollars. The acceptance of Euros would not have “overcome” that impediment; it would merely have substituted a different performance. As Lord Hamblen rightly observed, “the object of the reasonable endeavours proviso is to maintain contractual performance, not to substitute a different performance” (at [38]).
It is suggested that this reasoning is unassailable. To hold otherwise would transform a “reasonable endeavours” proviso (intended as a narrow exception to the excuse of non-performance) into a perverse paradox: a mechanism for performance through non-performance. It would allow a party to bypass an impediment by compelling the counterparty to accept something other than what was bargained for.
The Gilbert-Ash principle extended
The Court reinforced its conclusion by reference to the principle in Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689: that clear words are required to forego valuable rights. Historically, this presumption applied to rights arising under the general law (e.g., set-off or tortious remedies). Lord Hamblen, however, suggested obiter that the principle applies equally to “valuable contractual rights” (at [45]).
This is a significant, albeit understated, development. It implies that a party seeking to rely on a general “reasonable endeavours” clause to alter specific contractual rights (such as the currency of payment) faces a heavy interpretative burden. If parties intend that “reasonable endeavours” should include the surrender of contractual rights, they must say so expressly.
Certainty and the freedom not to contract
Finally, the judgment is a salutary defence of party autonomy and commercial certainty. As Lord Hamblen noted, the “freedom not to contract includes freedom not to accept the offer of a non-contractual performance” (at [42]). It is surprising that this fundamental point was overlooked by the Court of Appeal and the High Court.
Regarding certainty, the Court rightly dismantled RTI’s proposed test, which would have required an assessment of whether non-contractual performance caused “no detriment” to the affected party. Such a test is inherently vague. What constitutes “detriment”? Is it purely financial, or does it include administrative inconvenience or legal risk? Over what period is it measured? These are questions of degree that yield no binary answer. By contrast, the rule affirmed by the Supreme Court provides a bright line: contractual performance is the yardstick. This restores predictability to an area where the lower courts had adopted an unhelpful and unprincipled approach.
