Jet2.com Ltd v Blackpool Airport Ltd [2012] EWCA Civ 417

Case No A3/2011/1807[2012] EWCA Civ 417
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2011] EWHC 1529 (Comm)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
COMMERCIAL COURT
His Honour Judge Mackie Q.C.
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 2 April 2012
Before
LORD JUSTICE LONGMORELORD JUSTICE MOORE-BICKLORD JUSTICE LEWISON
Between
JET2.COM LIMITEDClaimant/BLACKPOOL AIRPORT LIMITEDDefendant/Appellant
Mr. George Leggatt Q.C. and Mr. Michael Bools (instructed by Eversheds LLP) for appellantMr. Philip Shepherd Q.C. and Mr. Adam Cloherty (instructed by Bird & Bird LLP) for respondentHearing Hearing dates : 29 th February & 1 st March 2012
JudgmentLord Justice Moore-Bick :Background
[1]The appellant, Blackpool Airport Ltd (“BAL”), owns and operates a commercial airport on the outskirts of Blackpool. The respondent, Jet2.com Ltd (“Jet2”), is a low-cost airline operating out of a number of domestic airports offering flights to various United Kingdom and European destinations. BAL is currently 95% owned by Balfour Beatty Plc, but until 2008 it was owned by City Hopper Airports Ltd (“City Hopper”), a company which owned a number of smaller airports from which low-cost airlines operated.[2]In September 2005 BAL, City Hopper and Jet2 signed a document described as a Letter Agreement setting out the terms on which Jet2 would operate from Blackpool over the course of the following 15 years. The agreement provided that Jet2 and BAL would co-operate to promote Jet2’s low-cost services from Blackpool and set out the terms on which BAL would provide ground services and marketing support for Jet2’s business. Jet2 proposed to begin a service between Blackpool and Belfast as soon as practicable, to base an aircraft at Blackpool from March 2006 and to build its fleet at Blackpool in accordance with demand.[3]Under the legislation governing the licensing of airports the licence holder is required to notify the Civil Aviation Authority of the hours between which the airport is open for business to anyone who wishes to use it. In the case of Blackpool these were 7.00 a.m. to 9.00 p.m. local time throughout the year. For convenience I shall refer to these as the “normal opening hours”. There is nothing to prevent an airport from opening outside those hours by agreement with airline operators, provided the Civil Aviation Authority is informed of any arrangements made for that purpose.[4]For over four years from March 2006 Jet2 operated flights out of Blackpool in accordance with schedules submitted to and accepted by BAL, under which there were regular arrivals and departures outside normal opening hours. Keeping an airport open outside normal opening hours inevitably causes the operator to incur additional costs in providing support services. Blackpool Airport has apparently never made a profit, at any rate during the years up to and including 2010, and in 2010 BAL became increasingly concerned at the costs that were being incurred as a result of aircraft movements taking place outside normal opening hours. Relations between the parties became increasingly strained until eventually, on 22nd October 2010, BAL told Jet2 that from midnight on 29th October it would not accept departures or arrivals scheduled outside normal opening hours. As a result, two of Jet2’s flights were diverted from Blackpool to Manchester at short notice causing considerable inconvenience to passengers and expense to Jet2.[5]In response Jet2 brought proceedings against BAL seeking damages for breach of contract and a declaration that under the Letter Agreement it was obliged to accept aircraft movements outside normal opening hours. It also obtained an interim injunction against BAL, the effect of which was to require BAL to handle aircraft movements over the winter season 2010-2011 broadly in accordance with the flight schedules agreed for the winter season the previous year. At the conclusion of the trial the judge held that BAL was in breach of contract in refusing to handle flights outside normal opening hours, but he declined to grant Jet2 the declaration it sought. BAL now appeals against the judge’s decision. The Letter Agreement[6]The Letter Agreement takes the form of a letter dated 23rd September 2005 from Jet2 to BAL and City Hopper, which was counter-signed by representatives of both addressees to indicate their agreement. The opening paragraph and clauses 1 and 2 are of most relevance to the present appeal. They provide as follows:
“This Letter Agreement sets out the terms of the agreement between Blackpool Airport Limited . . . and City Hopper Airports Limited . . . and Channel Express (Air Services) Limited . . . trading as Jet2.com . . . in relation to low cost services from and to Blackpool Airport (BA). 1. Jet2.com and BAL will co-operate together and use their best endeavours to promote Jet2.com’s low cost services from BA and BAL will use all reasonable endeavours to provide a cost base that will facilitate Jet2.com’slow cost pricing. Jet2.com proposes to commence a service between Belfast International Airport and BA as soon as practicable and to base one B737-300 aircraft, or its equivalent, at BA from the commencement of the Summer operating season, 26 March, 2006, and to operate and build its fleet at BA in accordance with demand for an initial period of 15 years from the date of the first service by Jet2.com from BA and the terms set out in this Letter Agreement will, except as otherwise stated, apply for the 15 year period. Not later than three months prior to the expiry of such initial period of 15 years, senior representatives of the parties of this letter agreement will meet in good faith to review and agree a new Charging Scheme which will enable Jet2.com to continue to develop its base at BA and increase its low cost services from BA. 2. In consideration of the investment that Jet2.com is making in offering such services from BA, BAL will make available the following pricing and other benefits to Jet2.com in relation to BA: (a) (i) BAL will levy airport charges on Jet2.com on the basis of the Charging Scheme as set out in Appendix A for the initial period of 15 years commencing on the date of Jet2.com’s first flight from BA. These charges include all BAL’s aircraft movement, handling and passenger charges to Jet2.com including landing, navigation, marshalling etc., parking, passenger facilities charges, passenger security charges, security, baggage x-ray and security screening, baggage handling, bussing, CUTE and check-in desk charges. . . . (b) BAL will provide a contribution towards Jet2.com’smarketing expenditure to be calculated in accordance with Schedule B, such payment to be paid quarterly in arrears following Jet2.com’s first flight of its BA based aircraft. (c) BAL will arrange for prominent Airport advertising at BA of Jet2.com’s low cost product and its destinations, together with frequent promotional facilities at such sites as BA controls and will facilitate editorial and news coverage of Jet2.com’s activities in its magazines and with newspapers, all at no cost to Jet2.com. (d) BAL and Jet2 will mount joint PR promotions with the aim of promoting and enhancing BAL and Jet2.com’s operations to the general public.”
Paragraphs (e) to (m) set out other obligations undertaken by BAL in the provision of airport services of various kinds. Jet2.com proposes to commence a service between Belfast International Airport and BA as soon as practicable and to base one B737-300 aircraft, or its equivalent, at BA from the commencement of the Summer operating season, 26 March, 2006, and to operate and build its fleet at BA in accordance with demand for an initial period of 15 years from the date of the first service by Jet2.com from BA and the terms set out in this Letter Agreement will, except as otherwise stated, apply for the 15 year period. Not later than three months prior to the expiry of such initial period of 15 years, senior representatives of the parties of this letter agreement will meet in good faith to review and agree a new Charging Scheme which will enable Jet2.com to continue to develop its base at BA and increase its low cost services from BA. (a) (i) BAL will levy airport charges on Jet2.com on the basis of the Charging Scheme as set out in Appendix A for the initial period of 15 years commencing on the date of Jet2.com’s first flight from BA. These charges include all BAL’s aircraft movement, handling and passenger charges to Jet2.com including landing, navigation, marshalling etc., parking, passenger facilities charges, passenger security charges, security, baggage x-ray and security screening, baggage handling, bussing, CUTE and check-in desk charges. . . . (b) BAL will provide a contribution towards Jet2.com’smarketing expenditure to be calculated in accordance with Schedule B, such payment to be paid quarterly in arrears following Jet2.com’s first flight of its BA based aircraft. (c) BAL will arrange for prominent Airport advertising at BA of Jet2.com’s low cost product and its destinations, together with frequent promotional facilities at such sites as BA controls and will facilitate editorial and news coverage of Jet2.com’s activities in its magazines and with newspapers, all at no cost to Jet2.com. (d) BAL and Jet2 will mount joint PR promotions with the aim of promoting and enhancing BAL and Jet2.com’s operations to the general public.”[7]Before the judge Jet2 argued that the obligation imposed on both parties by clause 1 to use their best endeavours to promote Jet2’s low-cost services obliged BAL to handle its arrivals and departures between 6.00 a.m. and midnight and to do its best to accommodate occasional movements outside those hours. BAL argued that its obligation was limited to promoting Jet2’s services in the sense of advertising and marketing them, that the agreement was silent about the hours during which it would accept aircraft movements and that it was under no obligation to accept movements outside normal opening hours. It also argued that it was entitled to take into account its own commercial interests when deciding what steps to take in the exercise of its best endeavours to promote Jet2’s services. It was not obliged to handle aircraft movements outside normal opening hours if the additional revenue it obtained did not cover the cost of doing so.[8]The judge heard a good deal of evidence about the background to the agreement and about the economics of operating a low-cost airline. He made the following findings:
“23. Blackpool is a small regional airport with published opening hours which provide for other hours only by agreement. The cost of opening the airport to service a single flight greatly exceeds the revenue which the operation will generate. The low cost services described in the Agreement would have been seen by the parties in 2005 as requiring flexibility in scheduling early departures and late arrivals. This is so particularly during the peak summer season when maximum utilisation of aircraft is required on flying days. This requirement is obvious and is also supported, for example, by a document produced by the European Low Fares Airlines Association. The need for a low cost and flexible base for Jet2.com was also identified by BAL in presentations made to Jet2 in 2004 and 2005 before the Agreement was entered into. The need for flexibility increases where an airline has aircraft based at the airport because there are significant costs associated with diverting aircraft crews and support services from one airport to another. As both parties knew from, for example, the list of destinations used in BAL’s presentations to Jet2 the services would be primarily to summer sun destinations. 24. At sometime in 2005 BAL produced the “Master Plan Passenger Forecast 2005 to 2030” described as a “methodology and output for the long-term forecasts developed as part of the Blackpool International Airport master planning process”
. BAL witnesses sought to play down the significance of this document and argue that as it was a document which Jet2 did not see at the time it is not part of the matrix. Mr Orrell described the master plan as a “very aspirational document”, Mr Spooner said it was simply a “statement of ambition”. Although neither was around at the time that may well be right. But the document does contain indications that assumptions made by Jet2 were shared at the time within BAL. Thus “based aircraft need to depart between 0600 and 0730 in order to keep utilisation high but operate within a two crew roster; which in turn creates additional pressures on runway capacity on a morning peak.” It is pointed out that “typically, low-cost airlines look to achieve around twelve hours airborne per unit per day, four rotations or sectors using two sets of crew”. 25. Obtaining “slots” to visit high summer demand destinations is competitive and those available to Jet2 would often be outside peak hours. It would be known to both parties that allocation of slots is often ‘grandfathered’ in favour of those who have operated the longest. Furthermore because of the distance to some of those destinations and the commercial requirement to operate two or three rotations each day, early and late departures and arrivals might well be necessary. The direct first hand experience of Mr Ward of Jet2 was more convincing than the less detailed and more anecdotal evidence put forward by BAL. 26. At the time the Agreement was being negotiated both Ryanair and Monarch were operating scheduled services at Blackpool outside BAL’s promulgated opening hours. 27. Unforeseen delays are a fact of life in air travel. 28. This picture would be of no surprise to any member of the public who has struggled to stay awake at an airport early in the morning or late in the evening when going to or returning from holiday.”[9]In the light of that factual background the judge held that the word “promote” had been used in clause 1 of the Letter Agreement to mean “advance” in a general sense, rather than merely to advertise and market; that the provision of “a cost base that [would] facilitate Jet 2’s low-cost pricing” meant providing facilities and services that would enable low-cost pricing; that the absence of an express provision about opening hours suggested that it was too obvious to need mentioning that Jet2, like its competitors at Blackpool, would not be confined to normal opening hours; and that the object to which the parties were obliged to direct their best endeavours included securing flexible working hours extending beyond normal opening hours. As to best endeavours, he held that BAL did not have complete freedom to consult its own commercial interests, but he was acutely conscious that the obligation to provide a low cost base was not absolute and that the exercise of best endeavours had to be judged in the light of events as they occurred. For that reason he was unwilling to grant a declaration in the terms sought by Jet2, but he did hold that BAL was in breach of contract in October 2010 in refusing to handle Jet2’s flights outside normal opening hours.[10]On behalf of BAL Mr. George Leggatt Q.C. submitted that clause 1 of the Letter Agreement was not intended to create legally enforceable obligations of any kind. He likened it to a preamble in which the parties described in general terms the intent and purpose of the detailed provisions contained in clause 2 and the two appendices. He emphasised that Jet2 had not entered into an enforceable obligation to build up its fleet at Blackpool and submitted that it would be surprising in those circumstances if BAL had entered into an obligation to keep the airport open for Jet2’s operations between particular hours, or at all, for a period of 15 years. The absence of any reference to opening hours was, he submitted, a strong indication that it was not a matter within the scope of the agreement. He argued that the Letter Agreement was analogous to a tariff of charges which would remain available to Jet2 for a period of 15 years. The parties contemplated no more than that flights would be handled in accordance with schedules agreed between Jet2 and BAL from time to time, as indeed happened.[11]On behalf of Jet2 Mr. Philip Shepherd Q.C. relied heavily on the nature of the low-cost airline business in support of his submission that the parties had taken it for granted that Jet2 would need to schedule aircraft movements outside normal opening hours and that, in the performance of its obligation to use best endeavours to promote Jet2’s business, BAL would ensure that it could so. The nature and scope of the agreement[12]Perhaps the first point to note is that the Letter Agreement does not read like a mere tariff of charges, nor does clause 1 read like a mere preamble or statement of aspirations. On the contrary, in my view the language of the opening paragraph makes it quite clear that the intention of the parties was to enter into a binding agreement on the terms that follow. Insofar as the clauses of the agreement call for a preamble to set them in context, the opening paragraph provides it and does so in terms that are inconsistent with the suggestion that clause 1 was intended to be nothing more than a statement of the parties’ aspirations. Each of the numbered clauses, apart from the second (unnumbered) paragraph of clause 1, is couched in language of a kind that indicates an intention to create binding obligations. Whether the language is apt in all cases to achieve that object, and, if so, with what effect, may be open to argument, but I do not myself doubt that the parties intended that each paragraph should give rise to one or more obligations in accordance with its terms. The fact that the agreement was expressed to continue in effect for 15 years is not in my view inconsistent with an intention to enter into binding obligations once one recognises the nature and scale of the investment involved in basing one or more aircraft at Blackpool and building up a business that was hoped and expected to be profitable to both parties. The more difficult question concerns the nature and content of whatever obligations are created by clause 1.[13]It is convenient first to consider what the parties meant by the use of the word “promote” and the expression “provide a cost base that will facilitate Jet2.com’slow cost pricing” in that context. The word “promote” may carry various shades of meaning. Mr. Shepherd submitted that it is used here in the general sense of “advance” and is apt to cover any steps designed to lead to the growth of Jet2’s business. Mr. Leggatt submitted that it has the narrower meaning of “market” and points to the use of the expressions “promotional facilities”, “promotions” and “promoting” in clauses 2(c) and (d), both of which are concerned with advertising and marketing. He submitted that the parties are likely to have used the word in the same sense in clause 1.[14]I am not particularly impressed by the argument from consistency of use. This was a document apparently drafted by the parties themselves, probably without the benefit of legal advice. Clause 1 is worded in broad terms, as Mr. Leggatt often reminded us, and was intended to express the parties’ intentions on a broad scale. In those circumstances I do not think that the narrower meaning of the word is to be preferred. The fact that the same or similar words are used in a narrower sense in the context of the more specific provisions of clauses 2(c) and (d) does not point strongly to an intention to adopt the same narrower meaning in the rather different context of clause 1. Although clause 1 no doubt looks forward to clause 2, its horizons are in my view much wider. I think the judge was right in his construction of the word “promote” and that in this instance it bears the broader meaning of “advance”.[15]I find the expression “use all reasonable endeavours to provide a cost base that will facilitate Jet2.com’slow cost pricing” rather more difficult to interpret. The natural meaning of the expression is that BAL would do its best to ensure that charges made for ground services would support Jet2’s low-cost pricing model, but since the parties had agreed the charges payable by Jet2 in clause 2(a)(i) and Appendix A (and, insofar as they were not covered by Appendix A, by adopting BAL’s standard conditions of use), it cannot have that meaning. The cost base of any business is linked to the use it can obtain from its assets. In the case of an airline the unit cost of tickets reflects, among other things, the number of seats filled and the number of round trips the aircraft can make each day. I think this (admittedly somewhat opaque) phrase was probably intended to impose on BAL an obligation to use all reasonable endeavours to enable Jet2 to keep its unit costs (and therefore ticket prices) down by using the aircraft in the most efficient manner. That is consistent in commercial terms with the earlier obligation to promote Jet2’s services.[16]This brings me to the question at the heart of the appeal, namely, whether by virtue of clause 1 of the Letter Agreement BAL was under an obligation to accept arrivals and departure of Jet2’s aircraft in October 2010 outside normal opening hours. It is necessary to consider the matter in those terms because it was not argued before the judge that the acceptance by BAL of the winter 2010 schedule was itself sufficient to give rise to an enforceable agreement to accept aircraft movements in accordance with it. Jet2 contended that the obligation arose under clause 1; BAL denied that the clause gave rise to any obligation, but argued that, if it did, the obligation was no more than to use best or all reasonable endeavours (which it was agreed meant the same thing), which did not oblige it to act contrary to its commercial interests.[17]There was a good deal of evidence before the judge to support his finding that low-cost airlines depend on being able to obtain maximum use of their aircraft and that that in turn means operating schedules under which aircraft movements occur early in the morning and late at night. In 2005 other low-cost airlines, notably Ryanair and Monarch, were operating out of Blackpool and it was common for planes to arrive and depart outside normal opening hours. In early 2005 BAL published a revised schedule of charges which included Out of Hours Surcharges for aircraft movements outside normal opening hours calculated by reference to the demands imposed by the aircraft involved. Those surcharges covered the periods between 9.00 p.m. and 10.00 p.m. and between 10.00 p.m. and 7.00 a.m. respectively in respect of which different rates applied. The very publication of the surcharges suggests that aircraft movements outside normal opening hours were commonplace, a conclusion borne out by the judge’s findings. Indeed, the judge found that it was too obvious to need mentioning that the movements of Jet2’s aircraft, like those of its competitors at Blackpool, would not be confined to normal opening hours.[18]Mr. Leggatt submitted that the first paragraph of clause 1 of the Letter Agreement was too uncertain in its content to give rise to any obligation enforceable in law. In general an obligation to use best endeavours, or all reasonable endeavours, is not in itself regarded as too uncertain to be enforceable, provided that the object of the endeavours can be ascertained with sufficient certainty: see, for example, R. & D. Construction Ltd v Hallam Land Management Ltd [2010] CSIH 96, to which I shall refer in more detail later. It is necessary, therefore, to concentrate on the two objects identified in that paragraph, namely, the promotion of Jet2’s low cost services and the provision of a cost base that would facilitate Jet2’slow cost pricing.[19]Mr. Leggatt submitted that neither object was defined with the degree of certainty that enabled the obligation to be enforced and he cautioned against proceeding on the basis that although the scope of the obligation was uncertain, it was possible to say that certain conduct did or did not involve a breach of it. He also submitted that even if the obligation was capable of enforcement, it did not require BAL to act contrary to its own commercial interests.[20]In support of his submissions he drew the court’s attention to a number of cases in which the courts have considered the effect of an obligation to use reasonable or best endeavours. The first was Sheffield District Railway Co. v Great Central Railway Co. (1911) 27 T.L.R. 451, a decision of the Rail and Canal Commissioners chaired by A.T. Lawrence J.. In that case the Sheffield District Railway (“the Sheffield”) had entered into an arrangement with the Lancashire, Derbyshire and East Coast Railway (“the Derbyshire”) for the operation of a short line with two stations by means of which traffic gained access to Sheffield. The Derbyshire was originally a competitor of the Great Central Railway which had many more stations and arranged for goods to be carted to and from its own stations rather than being left to use the stations of its competitors. The Derbyshire subsequently amalgamated with the Great Central Railway which took over the operation of the Sheffield on the terms in force between it and the Derbyshire. These included an obligation to use best endeavours to develop the Sheffield’s traffic. Following the amalgamation the Great Central continued to act as it had before, with the result that goods which could have been taken to or from one of the Sheffield’s stations were instead taken to or from one of the Great Central’s stations. The Sheffield complained that the Great Central was in breach of the obligation to use its beast endeavours to develop its traffic. The Commissioners held that the words imposed on the Great Central an obligation to leave no stone unturned, within the bounds of reason, to develop the Sheffield’s traffic. The object of the endeavours was not considered too uncertain to be capable of enforcement.[21]The next case to which Mr. Leggatt referred was Terrell v Mabie Todd and Co. Ltd [1952] 2 T.L.R. 574, a case concerning an obligation to use best endeavours to promote the sales of fountain pens and ink bottles designed by the plaintiff. The court held that such an obligation did not require the directors to act in a way that would ruin the company or to act in complete disregard of the interests of the shareholders, but only to do what could reasonably be done in the circumstances. The standard of reasonableness was held to be that of a reasonable and prudent board of directors acting properly in the interests of the company and applying their minds to their contractual obligations to exploit the inventions. Again, it was not suggested that the object of the endeavours was too uncertain to enable the clause to be enforced.[22]A.P. Stephens v Scottish Boatowners Mutual Insurance Association (The ‘Talisman’) [1989] 1 Lloyd’s Rep. 535 concerned a claim against insurers for the loss of a fishing vessel. The policy excluded liability for loss when the insured had not used all reasonable endeavours to save the vessel. The vessel was lost while working as a result of the entry of seawater through the seacocks which the master wrongly thought had to be left open when pumping out the bilges. The House of Lords held that the proper standard to apply when deciding whether the owner had failed to use all reasonable endeavours was that of an ordinary competent fishing boat skipper. In my opinion the circumstances of that case are too far removed from those of the present for the decision to afford much assistance.[23]In P. & O. Property Holdings Ltd v Norwich Union Life Insurance Society (1994) 68 P. & C.R. 261 a property developer undertook to use reasonable endeavours to obtain lettings of units in a new shopping centre, the construction of which was financed by the defendant insurer. A question arose whether the developer was obliged to agree to the payment of reverse premiums to induce potential tenants to enter into leases when under the terms of the development agreement it alone would have to bear the cost. The House of Lords rejected the submission that by agreeing to use reasonable endeavours the parties were to be taken as having adopted an objective standard for determining what terms it would be reasonable to agree, but the dispute turned on the construction of the particular clause in the development agreement and provides little assistance in deciding the present case.[24]In Phillips Petroleum Co. UK Ltd v Enron Europe Ltd [1997] C.L.C. 329 the question for decision was whether an obligation to use reasonable endeavours to agree the date on which deliveries of natural gas by the claimant to the defendant should commence, subject to an agreed fall-back date, gave rise to an enforceable obligation or constituted no more than an obligation to attempt to reach agreement and so was unenforceable. Kennedy L.J. found it impossible to construe the obligation in the context of its contractual setting as imposing on the buyer an obligation to disregard the financial effect of agreeing a commissioning date earlier than the fall-back date. Potter L.J. considered that an agreement to use reasonable endeavours to agree is unenforceable because its content is too uncertain. Apart from reinforcing the well established principles that the terms of the relevant clause must be construed in their contractual and factual context and that an agreement to use reasonable endeavours to agree is unenforceable, this case also does not in my view assist greatly.[25]Mr. Leggatt next referred us to Baird Textiles Holdings Ltd v Marks & Spencer plc [2002] 1 All E.R. (Comm) 737, a case in which the claimant attempted to derive from a series of individual orders for the manufacture and sale of clothing a long-term contract to purchase garments in reasonable quantities and at reasonable prices. The attempt failed, principally because the contract which the claimant sought to establish contained no objective criteria by which the court could establish what would be reasonable either as to quantity or price and was therefore too uncertain to be capable of enforcement. That very lack of certainty was held to confirm the absence of any intention to enter into contractual relations.[26]Yewbelle Ltd v London Green Developments Ltd [2006] EWHC 3166 (Ch) (unreported) concerned an undertaking to use all reasonable endeavours to obtain an agreement under section 106 of the Town and Country Planning Act 1990 for the construction of a library and other facilities. It was not suggested that the obligation was unenforceable; the issue was whether Yewbelle had done all that it should have done in performance of the obligation. Having considered both P. & O. Property Holdings v Norwich Union and Phillips Petroleum v Enron, Lewison J. (as he then was) expressed the view that Yewbelle was not required to sacrifice its own commercial interests in discharging its obligation to use reasonable endeavours. However, he agreed that the obligation to use reasonable endeavours continues until the point is reached at which all reasonable efforts have been exhausted.[27]In EDI Central Ltd v National Car Parks Ltd [2010] CSOH 141 the relevant obligation was to procure that a development of a project was pursued “with all reasonable endeavours and as would be expected of a normal prudent commercial developer”. Lord Glennie, following Yewbelle v London Green Developments, expressed the view that an obligation to use all reasonable endeavours does not require a person to act against his own commercial interests, but he did acknowledge that the reference to a normal prudent commercial developer was important in defining the scope of the obligation in that case.[28]Finally Mr. Leggatt referred to R. & D. Construction Ltd v Hallam Land Management Ltd, in which the defendant had agreed to sell to the claimant at an agreed price a parcel of land to be purchased from a third party. The sale was conditional upon the defendant’s agreeing a price with the third party that was “wholly acceptable” to it as buyer, the defendant being under an obligation “to use all reasonable endeavours in this regard”. Following the defendant’s failure to agree a purchase price with the third party and withdrawal from the contract, the claimant brought proceedings for breach of contract, as a result of which the court had to consider the effect of the condition and the undertaking to use reasonable endeavours. The discussion in the judgments was directed primarily to whether the obligation was sufficiently certain to be enforceable, not because it was couched in terms of best endeavours, but because the object of those endeavours was to obtain an agreement on terms that were acceptable to the defendant himself. All three members of the court were satisfied that it was capable of enforcement, because the defendant’s state of mind was capable of being ascertained objectively, however difficult that might prove to be. I have some reservations about the correctness of the decision in that case, because, in the absence of some objective criterion by reference to which the defendant’s satisfaction was to be judged, the clause allowed him to decide for himself whether any particular terms were or were not acceptable. The contract therefore imposed on him no more than an obligation to agree terms if he so wished. Nonetheless, the decision is of assistance in as much as it emphasises the importance of concentrating on the object of the endeavours that are to be exercised.[29]As to Mr. Leggatt’s submission that the first paragraph of clause 1 of the Letter Agreement is too uncertain to be capable of giving rise to any legal obligation, I think there is an important difference between a clause whose content is so uncertain that it is incapable of creating a binding obligation and a clause which gives rise to a binding obligation, the precise limits of which are difficult to define in advance, but which can nonetheless be given practical content. A famous example of the former is to be found in G. Scammell and Nephew Ltd v H.C. and J.G. Ouston [1941] A.C. 251, in which the court held that a contract to purchase a van on terms that part of the price should be paid “on hire-purchase terms over a period of two years” was too uncertain to be enforceable. An example of thelatter is an obligation to promote the sale of the claimant’s product, as in Terrell v Mabie Todd and Co. Ltd. The content of an obligation to use best endeavours to promote another person’s business is not so uncertain as to be incapable of giving rise to a legally binding obligation, although it may be difficult to determine in any given case whether there has been a breach of it. In my view the obligation to use best endeavours to promote Jet2’s business is no more uncertain than the obligation to use best endeavours to develop a railway’s traffic (Sheffield District Railway Co. v Great Central Railway Co.), or to promote the sales of fountain pens and ink bottles (Terrell v Mabie Todd and Co. Ltd). There may be argument about what constitutes best endeavours in any particular circumstances (see, for example, Terrell v Mabie Todd and Co. Ltd.), but that is a different matter.[30]The judge held in paragraph [79] of his judgment that opening outside normal hours was taken to be part of the service BAL provided and part of the deal, by which I think he meant that both parties contemplated and intended that operations would be conducted in that way. He did not seek to define with any great precision the meaning of the word “promote” in that context and it was unnecessary for him to do so, since it followed from his findings about the nature of the low-cost airline business that the ability to operate aircraft early in the morning and late at night was necessary in order for it to prosper. Conversely, an inability to operate aircraft at such times would undermine its viability.[31]In my view the obligation to use best endeavours to promote Jet2’s business obliged BAL to do all that it reasonably could to enable that business to succeed and grow and I do not think the object of the best endeavours is too uncertain to be capable of giving rise to a legally binding obligation. In my view the promotion of Jet2’s business did extend to keeping the airport open to accommodate flights outside normal hours, subject to any right it might have to protect its own financial interests. Accordingly, I think the judge’s decision on that aspect of the matter was correct. On the other hand, an obligation to use all reasonable endeavours to provide a cost base that will facilitate some essential element of another person’s business seems to me to pose greater problems, because it is much more difficult to identify its content. The words are said to import an obligation to use all reasonable endeavours to enable Jet2 to keep its unit costs (and therefore ticket prices) down by enabling it to use its aircraft in the most efficient manner, but I find them too opaque to enable me to give them that meaning with any confidence. However, it is unnecessary to reach any final decision on that question in the present case.[32]It was a central plank of BAL’s argument before the judge that the obligation to use best endeavours did not require it to act contrary to its own commercial interests, which, in the context of this case, amounts to saying that BAL was not obliged to accept aircraft movements outside normal hours if that would cause it financial loss. Some support for that conclusion can be found in the cases, notably Terrell v Mabie Todd and Co. Ltd and Yewbelle Ltd v London Green Developments Ltd, but I think the judge was right in saying that whether, and if so to what extent, a person who has undertaken to use his best endeavours can have regard to his own financial interests will depend very much on the nature and terms of the contract in question. In Terrell v Mabie Todd and Co. Ltd the context in which the undertaking was given was sufficient in my view to make it clear that the company was not expected to do more than could reasonably be expected of a prudent board of directors acting in the interests of the shareholders. In neither Yewbelle Ltd v London Green Developments Ltd nor EDI Central Ltd v National Car Parks Ltd was there any extended discussion of what sacrificing its own interests might involve, either in the context of the case under consideration or more generally. I approach with some caution the submission that BAL was entitled to refuse to accept aircraft movements outside normal opening hours if that caused it to incur a loss, because on the judge’s findings the ability to schedule aircraft movements outside those hours was essential to Jet2’s business and was therefore fundamental to the agreement. In those circumstances one would not expect the parties to have contemplated that BAL should be able to restrict Jet2’s aircraft movements to normal opening hours simply because it incurred a loss each time it was required to accept a movement outside those hours, or because keeping the airport open outside normal hours proved to be more expensive than it had expected. On the other hand, I can see force in the argument that if, for example, it were to become clear that Jet2 could never expect to operate low cost services from Blackpool profitably, BAL would not be obliged to incur further losses in seeking to promote a failing business.[33]Before the judge BAL relied solely on what it submitted was its right to refuse to act in a way that caused it to incur a loss in relation to individual aircraft movements outside normal opening hours. For the reasons I have given I am unable to accept that argument. I think the judge was right to hold that its refusal in October 2010 to accept further aircraft movements outside those hours involved a breach of contract and that is sufficient to uphold his decision. Whether under other circumstances BAL might be entitled to refuse to handle aircraft movements outside normal hours is a question that does not arise for consideration on this appeal. Given the uncertainty about the future course of events, I think the judge was right not to grant a declaration in terms that would rigidly define the scope of BAL’s obligation for the ensuing ten years. Estoppel by convention[34]As an alternative to its argument that the effect of the Letter Agreement was to give it a contractual right to require BAL to handle aircraft movements outside normal opening hours Jet2 submitted that, having regard to the way in which the parties had acted towards each other, BAL was estopped from denying that such a right existed. It relied on the established principle of estoppel by convention first recognised in Amalgamated Investment Property Co. Ltd v Texas Commerce International Bank Ltd [1982] Q.B. 84 and most recently approved by the House of Lords in Republic of India v India Steamship Co. Ltd (The ‘Indian Grace’) (No. 2) [1998] A.C. 878. In the latter case Lord Steyn expressed the principle as follows (page 913E-F):
“It is settled that an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption: K. Lokumal & Sons (London) Ltd. v. Lotte Shipping Co. Pte. Ltd. [1985] 2 Lloyd's Rep. 28; Norwegian American Cruises A/S v. Paul Mundy Ltd. [1988] 2 Lloyd's Rep. 343; Treitel, The Law of Contract, 9th ed. (1995), pp. 112-113. It is not enough that each of the two parties acts on an assumption not communicated to the other. But it was rightly accepted by counsel for both parties that a concluded agreement is not a requirement for an estoppel by convention.”
[35]In the present case Mr. Shepherd submitted that an estoppel arose out of the practice adopted by the parties over the preceding four years under which Jet2 submitted, and BAL accepted, flight schedules which included regular aircraft movements outside normal opening hours. As a result BAL was estopped from denying Jet2’s right to require aircraft movements outside those hours.[36]In my view this argument cannot succeed. It is unlikely, though not impossible, that each of the parties assumed that clause 1 of the agreement imposed an unqualified obligation on BAL in this respect, despite the fact that it was expressed in terms of an obligation to use best endeavours, but cogent evidence would be necessary to establish both that they had shared that assumption to the knowledge of each other and that they had conducted themselves on that basis. In my view there is no such evidence. All Mr. Shepherd could point to was a longstanding practice under which Jet2 (along with other airlines) submitted flight schedules for the ensuing six-month period which were accepted, with or without negotiation and modification, by BAL. That is sufficient to demonstrate that Jet2 did submit flight schedules and that they were in practice accepted by BAL, but it falls far short of demonstrating that the parties shared a common assumption that Jet2 had a right to insist on aircraft movements taking place outside normal opening hours and that BAL had an obligation to accommodate them. The need for a shared common assumption, in the sense that each party must have acted in the knowledge that the other shared its understanding of the position, is reflected in the passage in Lord Steyn’s speech in The ‘Indian Grace’ (No. 2), to which I referred earlier. The evidence in the present case is more consistent with ordinary business co-operation than with the reliance on, and recognition of, a legal obligation. Conclusion[37]For these reasons I would dismiss the appeal and uphold the order below.

Lord Justice Lewison:

[38]It is, of course, possible for a commercial organisation to undertake a positive commitment to run a business for a period as long as fifteen years. It is even possible for such an organisation to undertake a positive commitment to run a loss-making business for that period. But it would, I think, be an unusual obligation; and a businessman would expect such an obligation to be spelled out in clear words. In other contexts, such as a clause regulating the use of leased property, even where the language of a clause appears to impose on the tenant a positive obligation to run a business, the courts have often treated the clause as no more than an emphatic negative: see, for example Montross Associated Investments Ltd v Moussaief [1989] 2 EGLR 62; Chorley BC v Ribble Motor Services Ltd (1996) 74 P & CR 182; Blumenthal v Church Commissioners for England [2005] 1 EGLR 78.[39]The contract in the present case is one between two commercial organisations, each with its own commercial interest. Although in some places the contract requires them to co-operate or to act jointly, the contract as a whole does not create a fiduciary relationship in which the fiduciary must subordinate his own interests to those of his principal. Even if to some extent the arrangement can be characterised as a joint venture, that does not necessarily import fiduciary obligations. As the High Court of Australia recently pointed out in John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19 (§ 44) “Describing the arrangements as a “joint venture” does not however have any particular legal consequences. The rights and obligations of the parties remain to be determined by examination of the detail of what they have agreed and done.”[40]What, then, have the parties agreed? Clause 2 of the contract sets out a large number of detailed obligations. It deals with charges for use of the airport, the provision of office accommodation, car parking, staff passes and so on. Mr Leggatt submits, and I agree, that if BAL had contractually committed itself to keeping the airport open at whatever hours Jet2.com required, clause 2 would surely have said something about opening hours.[41]I agree with the judge that the content of an obligation to use reasonable endeavours (or, for that matter, best endeavours) depends on the context in which that expression is used. But the most important part of the context is the objective towards which the endeavours are to be directed. If the endeavours are directed towards a result which can be identified with certainty, then whether the endeavours satisfy the obligation can also be decided, if necessary with the aid of expert evidence. At one end of the spectrum is a case like The Talisman [1989] 1 Lloyd’s Rep 535 where the question was whether the skipper of a fishing boat had used reasonable endeavours to prevent the boat from sinking. The object of the endeavours was clearly defined. In that context, as Lord Keith explained, the test was :
“… an objective one, directed to ascertaining what an ordinarily competent fishing boat skipper might reasonably be expected to do in the same circumstances.”
[42]In some cases the contract itself will lay down an objective test. Thus in EDI Central Ltd v National Car Parks Ltd [2010] CSOH 141 (on appeal [2012] CSIH 6) the contract in question was one directed towards the redevelopment of a car park in Edinburgh owned by NCP. EDI was the developer. The contract contained an obligation on the part of the developer to procure that the redevelopment was “procured with all reasonable endeavours as would be expected of a normal prudent commercial developer experienced in developments of that nature”. The issue in the case was whether the developer had complied with that obligation. Lord Glennie (and on appeal the Inner House) held that it had. There was no issue about the objective towards which the endeavours were to be directed; nor was there any conceptual difficulty about applying the contractual test. Linder v Pryor (1838) 8 C & P. 518, 173 ER 600, to which Longmore LJ refers, was a case in which the primary obligation was to keep the house open as a “public licensed” house. It is not surprising that a failure to take any step to renew the licence was held to amount to a breach of that clause. I would not regard that as a case which turned on the more general aspiration to increase trade; but rather on the specific goal of renewing the licence.[43]At the other end of the spectrum are cases like P & O Property Holdings Ltd v Norwich Union Life Insurance Society (1994) 68 P & CR 261. That case concerned a development agreement between a developer and a funder for the development of the St Nicholas shopping centre in Sutton. The basic structure of the agreement was that in return for agreeing to fund the development up to a stated maximum the funder was to acquire a long lease of the completed centre. The developer was to receive a profit share calculated by reference to a multiple of the net income generated by letting the individual units. The funder had in fact advanced the maximum sum it was obliged to advance; and consequently could not be made to pay any more. The funding agreement required the funder and the developer to “use their reasonable endeavours to obtain a letting of each lettable part of the Development”. The issue between the parties was whether, as the funder argued, this obligation required the developer to pay reverse premiums to incoming tenants in order to maximise the passing or headline rent. One reason why the argument was rejected by the House of Lords was because as Lord Browne-Wilkinson explained:
“I am quite unable to extract from the words of the clause any such objective test of the reasonableness of the terms which have to be agreed if the reasonable endeavours obligation is to be discharged…”
[44]Another was that the parties should not be taken to have intended an unworkable scheme which would have given an arbitrator an impossible question to decide. As Lord Browne-Wilkinson put it:
“The desirability of paying a reverse premium depends upon the circumstances and wishes of the landlord. For a landlord whose cash flow is sufficient to pay the reverse premium, it will be a possible, though not necessarily desirable, course: for a landlord without liquid resources, it would be impossible. Since, under the judge's declaration, the incidence of the cost of a reverse premium is to be ignored, is the arbitrator to assume a reasonable landlord with sufficient funds looking for long term high rent tenants or a reasonable landlord without sufficient funds seeking a quick let at the best annual rent for the time being available? The former would be prepared to pay a reverse premium, the latter quite reasonably would not. The fact is that an arbitrator would be unable to reach a conclusion as to the reasonableness of the hypothetical landlord's attitude without being given a series of assumptions as to the nature, means and management aims of the hypothetical landlord.”
[45]This was a case in which the House concentrated on the uncertainty inherent in the concept of “reasonable endeavours” rather than the objective towards which the endeavours were directed. In Little v Courage Ltd (1995) 70 P & CR 469 it was the objective itself that was uncertain. The lease in that case contained an option to renew which was conditional on (among other things) the parties having agreed a business plan. No business plan had in fact been agreed. The tenant argued that the parties had an obligation to use their best endeavours to reach an agreement. This court rejected that argument. Millett LJ said:
“An undertaking to use one's best endeavours to obtain planning permission or an export licence is sufficiently certain and is capable of being enforced: an undertaking to use one's best endeavours to agree, however, is no different from an undertaking to agree, to try to agree, or to negotiate with a view to reaching agreement; all are equally uncertain and incapable of giving rise to an enforceable legal obligation.”
[46]This, then, was a case in which the objective towards which the endeavours were to be directed was too uncertain to enforce. In R & D Construction Ltd v Hallam Land Management [2010] CSIH 96 [2011] SC 286 the parties entered into a contract for the sale of land. However, the seller did not own the land at the date of the contract, but had the benefit of an option to acquire it as part of a larger parcel. The option was conditional on the seller using best endeavours to agree a price for the larger parcel with the proprietor of it in terms wholly acceptable to itself. The Court of Session Inner House held that the clause was legally effective, but that the seller was not in breach. In the course of their judgments the judges considered a number of the English cases. Lord President Hamilton said (§ 37):
“Accordingly whether a provision to use best endeavours is or is not sufficiently definite to be enforceable turns, on this approach, on the object of the endeavour. It may, as with the obtaining of a specific planning permission or a particular export licence, involve persuading an authority or other third party to adopt a particular position. The same is true, in my view, of a provision to use all reasonable endeavours.”
[47]As I read his judgment it was an approach with which he agreed. Dealing with the particular agreement in that case he said (§ 39) omitting references to authority:
“In the present case the object of the endeavours is not, in my view, uncertain. It is an agreement (presumably legally binding) between the respondent and a third party (the current proprietor) on a purchase price for the subjects ‘in terms wholly acceptable to [the respondent]’. It may be difficult to prove, as at any particular point of time, what terms are (or were) wholly acceptable to the respondent; but, if that subjective state of mind can be proved, then the object of the reasonable endeavours is clear. It is to secure an agreement on such terms with the proprietor. That is not an aspirational provision which parties adopt ‘to make clear a future co-operative intention without providing for an enforceable legal obligation which in negotiations one or other may have refused to agree’ … Nor is it a purported obligation to procure co-operation with a view to negotiation of terms yet to be. … Rather it is, in my view, an obligatory provision which requires one party in certain defined circumstances to take certain definite steps in relation to a third party. The circumstance that the obligation is in relation to dealings with a third party rather than between the parties themselves may not be immaterial…. While the purchase price wholly acceptable to the respondent may not have been known at the time when the missives were entered into, if it was ascertainable at the material time that, in my view, is sufficient….”
[48]The key to this reasoning is that the object of the endeavours was clear; and that it required the party in question to take defined steps in defined circumstances. Lord Reed said (§ 57) again omitting reference to authority:
“An obligation to use reasonable endeavours (or all reasonable endeavours) is generally enforceable, provided that the object of the endeavours is sufficiently definite…. That is because, granted a definite objective, it is possible for a court to determine whether the endeavours, if any, made by a party to achieve that objective were reasonable in the circumstances (or, in an ‘all reasonable endeavours’ case, whether the party made all the endeavours to achieve the objective which were reasonable in the circumstances). In the present case, the object of the endeavours is that the seller should agree a purchase price for the subjects with the current proprietor in terms wholly acceptable to the seller. For the reasons I have explained, that object is not lacking in certainty but has a definite meaning. It follows that an obligation to use all reasonable endeavours in that regard also has a sufficiently definite meaning to be enforceable.”
[49]Finally Lord Drummond Young said (§§ 63, 64):
“… there must in my opinion be minimum requirements before it is possible for a court to hold that a binding contract has been concluded. The critical minimum is in my view that there should exist a contractual obligation that can be measured against objective criteria. It is only in that way that an obligation can attain the certainty that is necessary for it to exist as an obligation…. The question of whether an obligation can be given objective content goes to whether an obligation can truly be said to exist at all. It is, however, closely related to the enforcement of the obligation. If an obligation has objective content the court can readily enforce it; by contrast, if a party is entitled to do as he chooses, it is difficult to see how effective enforcement is possible. In a number of cases courts have referred to the problems of enforcing or policing an obligation, and I think that this may reasonably be construed as recognition of the fact that objective content is required for an obligation to exist.”
[50]Although I share Moore-Bick LJ’s reservations whether there truly was an objective criterion in that case, the principles it espouses are correct. In my judgment the object of the endeavours and the range of possible endeavours must be considered together in order to decide whether there is a justiciable obligation. Moreover it is wrong in principle to focus on the particular factual situation which has given rise to the dispute without considering to what other factual situations the clause might extend if one side or the other is correct. As Potter LJ put it in Phillips Petroleum Co UK Ltd v Enron Europe Ltd [1997] CLC 329, 343:
“Finally, the unwillingness of the courts to give binding force to an obligation to use ‘reasonable endeavours’ to agree seems to me to be sensibly based on the difficulty of policing such an obligation, in the sense of drawing the line between what is to be regarded as reasonable or unreasonable in an area where the parties may legitimately have differing views or interests, but have not provided for any criteria on the basis of which a third party can assess or adjudicate the matter in the event of dispute. In the face of such difficulty, the court does not give a remedy to a party who may with justification assert, ‘well, whatever the criteria are, there must have been a breach in this case’. It denies the remedy altogether on the basis of the unenforceability in principle of an obligation which may fall to be applied across a wide spectrum of arguable circumstances. This case seems to me to afford a good example of the wisdom of that approach.”
[51]Although these observations were directed to an apparent obligation to use reasonable endeavours to agree, in my judgment they apply more generally. The principle that a clause must be considered across the whole potential range of its application is also made clear in Lord Diplock’s speech in The Miramar [1984] AC 676, 682.[52]Mr Shepherd QC submitted that the obligation in clause 1 of the letter agreement was “open textured”. But that, to my mind, is precisely the problem. How is a court to define or recognise the limits of the obligation? Mr Shepherd argued that the obligation required BAL to accept a flight schedule promulgated by Jet2.com operating between 0600 and 2400. But why those hours? If Jet2.com wanted to operate between 0500 and 0200 on the following day would they be entitled to insist that the airport remained open during the whole of that period? If not, why not? The difficulties to my mind do not stop there. Naturally the focus of debate has been the issue of opening times, because that was the casus belli. But the obligation is so open textured that it could potentially have repercussions elsewhere. The letter agreement excluded check-in charges from the agreed tariff and entitled Jet2.com to use its own check in staff. But it did not require Jet2.com to use its own check-in staff. If Jet2.com decided not to use its own staff for that purpose was it entitled to require BAL to provide the staff? After all, a low cost airline cannot operate without checking in its passengers. So why is the provision of check in staff not part of a general obligation to “promote” Jet2.com’s business at the airport? Mr Shepherd replied that in fact Jet2.com and BAL had entered into a separate ground handling agreement. That, with all respect, is no answer. The question is not what the parties did but what they were obliged to do. Moreover, if the obligation in clause 1 of the letter agreement envisaged that the parties would (or might) enter into a separate agreement dealing with ground handling, why does the same not apply equally to the details of the flight schedule? Then there is the question of potential conflict between Jet2.com and other carriers using the airport. Does the obligation to “promote” Jet2.com’s business at the airport entitle it to first pick of take off or landing slots in preference to other carriers? Mr Shepherd recognised that some operational adjustment might be necessary to a flight schedule proffered by Jet2.com. But I cannot get that out of the clause. Leaving aside the question of flight times, to what else does the obligation extend? Would it, for example, require BAL to provide enhanced passenger lounges for Jet2.com’s departing passengers; or to offer them complimentary refreshments while they wait?[53]An additional problem lies in the fact that clause 1 (whatever it means) was expressed to endure for fifteen years. Mr Shepherd did not suggest that there might come a time during those fifteen years when BAL ceased to be obliged to keep the airport open outside its promulgated hours. And even if such a time were to come, how would the parties recognise it? On the other hand he said that Jet2.com were free to withdraw aircraft during that period if they were not flying profitably for Jet2.com. This uneven effect of clause 1 is unlikely to have been the meaning that a reasonable reader of the contract would have understood.[54]Rather less attention was paid to BAL’s obligation in the second part of clause 1 “to use all reasonable endeavours to provide a cost base that will facilitate Jet2.com’s low cost pricing”. That was understandable. This part of the clause is concerned with costs; that is to say what payments Jet2.com is obliged to make (presumably to BAL). It is not concerned with the provision of additional services. The judge said “The provision of a cost base means, as I see it, providing in a broad sense facilities and services that will bring about the low cost pricing.” But to my mind this interpretation concentrates too much on “Jet2.com’s low cost pricing” and not enough on “provide a cost base”; and gives little, if any, weight to the word “cost” in the phrase “cost base”.[55]Mr Shepherd relied heavily on the factual background to the agreement. The background did show that low cost airlines require flexibility in scheduling early departures and (more importantly) late arrivals, especially during the summer months. The background also showed that both parties knew that. At the date of the contract both Ryanair and Monarch were operating scheduled services at Blackpool outside BAL’s promulgated opening hours. Mr Shepherd also placed heavy reliance on the fact that Jet2.com intended to acquire an aircraft to operate from the airport. He emphasised that this required considerable capital investment on the part of Jet2.com whereas BAL had all its fixed infrastructure in place, and, on his interpretation of the agreement, was required merely to incur additional marginal costs. I did not find this part of the background (to which the judge did not refer) persuasive. Granted that passenger aircraft are very expensive, the fact is that they can be based anywhere. If Jet2.com did not like Blackpool airport they could move their very expensive aircraft elsewhere. So the capital investment would not go to waste.[56]Moreover as

the judge rightly said:

“First the factual matrix does not dictate what the terms of the contract are. It provides the background against which the words of an agreement are interpreted.”
[57]So the question is always: what do the words mean? As

the judge pointed out:

“The Agreement says nothing about operations outside Blackpool’s normal opening hours.”
[58]If a contract says nothing about a particular topic, then even if that topic is demonstrated by the admissible background to be an important one, the default position must surely be that the topic in question is simply not covered by the contract.[59]I recognise, of course, how reluctant a court is to reach a conclusion that an apparent obligation intended to have legal content in fact has no enforceable content at all. But if the concept embodied in the clause in question is too vague, and there are no objective criteria that the court can apply in deciding whether or not the clause has been honoured, then there may be no alternative conclusion. In some cases a clause that appears to be too uncertain to enforce can be saved by a provision referring disputes to an expert or arbitrator. But that is not the case here. There is a way in which the clause can be given some content, albeit not as a free-standing and independent obligation. That is by treating clause 1 as setting out the general principle which is then implemented by the more detailed provisions of clause 2.[60]In my judgment the judge’s conclusion was not “construction of the contract” in the sense of “interpreting the contract”. It was “construction of the contract” in the sense of “making the contract” which the parties had not themselves made.[61]If, as I think, flight scheduling was to be the subject of separate agreement then a precipitate decision by BAL not to accommodate a previously agreed schedule might well amount to a breach of that agreement; but it would not be a breach of clause 1 of the letter agreement. But that is not the way that the case was run at trial. I would not, myself, rely on the fact that the parties had in fact operated without trouble for a number of years in order to decide what the contract meant. That seems to me to come close to using the parties’ subsequent conduct in order to interpret the contract.[62]For these reasons I regret that I do not agree with Longmore and Moore-Bick LJJ on the question of interpretation. I do, however, agree with Moore-Bick LJ that the plea of estoppel fails. I would allow the appeal.

Lord Justice Longmore:

[63]The only question before the judge (and the only question before us) was and is whether BAL was in breach of contract in declaring with minimal notice that they would no longer accommodate Jet 2’s wish to operate outside the formal opening hours of the airport, although BAL had done so for some years previously without question. The judge concluded that BAL was in breach of clause 1 of the letter agreement. Moore-Bick LJ agrees with the judge; Lewison LJ has decided that clause 1 of the letter agreement is too vague to have any legal content and that BAL was not therefore in breach of contract. He says that flight scheduling was to be the subject of a separate agreement and, if such agreement was reached, there might be a breach of that agreement. Since no allegation of any such agreement was made at trial, it is impossible to know whether there was any such agreement. We can only ask ourselves whether clause 1 of the letter agreement constituted a binding agreement and, if so, whether there was a breach of it.[64]If the parties call a document in letter form, which sets out terms of business, a “letter agreement” and if the first clause of that letter agreement uses words such as “will”, it is evident that the parties must, at least, think they have made an arrangement intended to be contractually binding between them. Of course that is not conclusive but courts should not, in my view, be too astute to decide that such an agreement is too vague to be legally enforceable. The putative obligation in question is that the parties will co-operate together “and use their best endeavours to promote Jet2.com’s low cost services” from Blackpool Airport.[65]As both Moore-Bick and Lewison LJJ agree, the object of the best endeavours will always be important in deciding whether the commitment is to be legally enforceable. An agreement to use best endeavours to reach an agreement may be unenforceable as an agreement to agree as effectively held in Little v Courage Ltd (1995) 70 P & CR469, but even in such a case the matter may not be completely beyond argument since a best endeavours obligation might at least be held to import an agreement to negotiate in good faith, as to which see Petromec Inc v Petroleo Brasiliero [2006] 1 Lloyd’s Rep 121 paras 125-121. No doubt, damages for breach of such an obligation could be problematical.[66]The phrase “best endeavours” has, however, a respectable legal history behind it. It has been used in leases of public houses since Napoleonic times in the context of keeping the house open and increasing its trade, a context perhaps not wholly dissimilar to promoting the services of an airline.[67]On 23rd January 1815 the brewers Thomas and Robert Pryor became the lessees of a public house for 21 years and covenanted to use “their best and utmost endeavours to continue the house open as a public licences victualling house and to increase the trade and custom thereof” for a rent of £30 per year and a premium of £300. They sub-let to a series of tenants but business fell off because many of the customers from “the several ship-builders’ yards in the neighbourhood … did not pay their bills” and the 1824 tenant only paid £20 per year without any premium. In 1829 the house fell into the hands of a Mr Davison during whose occupation there were frequent complaints of disorderly conduct and the magistrates took the licence away. After the lease expired in 1836 the landlord’s heirs complained that the Pryor brothers, in breach of contract, had not used their “best and utmost endeavours” to continue to keep the house open but allowed the house to be discontinued and the licence to be removed or not renewed. Tindal CJ directed the jury that there had been a breach and that they would have to assess the damages saying:- “It is my opinion … as the affirmative of the issue is on the defendant, that it is incumbent on him to show that he did some act after the refusal to renew the licence – that he applied for a re-hearing of the case, or did some act to endeavour to obtain, the continuance of it, and get the house open again. Therefore the question is, what damages are to be given.”[68]That was Linder v Pryor (1838) 8 C & P. 518, 173 ER 600. It is, of course, redolent of another age in one sense but it is not an isolated example, see e.g. Moore v Robinson (1878) 48 LJQB 176 where it was held that non-residence at the public house would not, of itself, be a breach of an obligation to “use … best endeavours to extend the custom and business” of the public-house.[69]The combination of these cases and the twentieth century cases referred to in my Lords’ judgments, to my mind, justify the conclusion that an obligation to use best endeavours should usually be held to be an enforceable obligation unless i) the object intended to be procured by the endeavours is too vague or elusive to be itself a matter of legal obligation; or ii) the parties have, in the words of Potter LJ in Phillips Petroleum v Enron Europe Ltd [1997] CLC 329 at 343, provided no criteria on the basis of which it is possible to assess whether best endeavours have been, or can be used.[70]It is in the context of (ii) above that it may be relevant to consider the extent to which a party can be obliged to act against his own interests. The fact that he has agreed to use his best endeavours pre-supposes that he may well be put to some financial cost, so financial cost cannot be a trump card to enable him to extricate himself from what would otherwise be his obligation. As A.T. Lawrence J said in the Sheffield District Railway Co case, best endeavours does not mean second best endeavours. But I would agree with Moore-Bick LJ (para 32) that, if it became clear that Jet2 could never expect to operate low cost services profitably from Blackpool, BAL could not be expected themselves to incur losses after that time in seeking to promote (or effectively propping up) a failing business.[71]For my part, I do not consider the promotion of a low cost airline to be so vague or elusive an object that the best endeavours obligation assumed by BAL should be regarded an unenforceable in law. Nor do I consider that the parties have not provided criteria by which it is possible to assess whether best endeavours can be, or have been, used.[72]I say that because the status quo will always be an essential matter to be considered. Any question of best endeavours was most unlikely to arise before the agreement started to be performed. Once performance had begun, the party who proposed to change the status quo should have to justify that change of stance. The “out of normal hours” use of the airport caused no problems for four years; reasonable endeavours had been used to promote Jet2’s low cost services. BAL’s sudden change of stance needed a justifiable explanation. The judge did not think there was one and neither do I.[73]I therefore agree with Moore-Bick LJ rather than Lewison LJ. The judge was, moreover, right to refuse a declaration that BAL were obliged for the whole 15 years duration of the contract to continue to keep the airport open otherwise than during normal hours. There might indeed be circumstances in which BAL, after proper notice, might be entitled to refuse to continue handling aircraft movements outside normal hours but that is not a question raised on this appeal which I would accordingly dismiss.

Cited in 14 later judgments

and 5 more of the most senior