Jet2.com Ltd v Blackpool Airport Ltd

An undertaking to use best or all reasonable endeavours is generally enforceable where the object of the endeavours is sufficiently certain. Difficulty in defining the obligation’s precise limits or deciding whether particular conduct breaches it does not itself make the obligation uncertain.

The extent to which the promisor may protect its own commercial interests depends on the contract’s nature and terms. Financial cost is not a trump card where the promised activity is fundamental to the parties’ bargain, although the promisor need not indefinitely support a business that has become incapable of profitable operation.

Estoppel by convention requires a communicated common assumption, shared or acquiesced in, and circumstances making departure from it unjust. A settled course of ordinary commercial co-operation does not alone establish that assumption.

Jet2.com Ltd agreed to operate low-cost air services from Blackpool Airport under a 15-year Letter Agreement. The parties promised to co-operate and use their best endeavours to promote those services. For more than four years, the airport accepted schedules containing regular flights outside its published opening hours.

In October 2010 Blackpool Airport Ltd announced that it would no longer accept such movements. Jet2 sought damages and declaratory relief. His Honour Judge Mackie QC held that the refusal breached the Letter Agreement, but declined to grant the requested declaration: [2011] EWHC 1529 (Comm).

The airport appealed. The central issues were whether clause 1 created an enforceable best-endeavours obligation extending to out-of-hours operations, whether the airport could rely on its own financial interests, and whether an estoppel by convention arose from the parties’ previous practice.

1. Appeal dismissed by a majority. Moore-Bick and Longmore LJJ held that clause 1 created a legally enforceable obligation and that the airport’s abrupt refusal in October 2010 to accommodate further out-of-hours movements was a breach. Lewison LJ dissented on contractual enforceability, but all three judges agreed that the estoppel case failed.

2. The Letter Agreement was intended to create binding obligations. In its contractual and commercial context, “promote” bore the broad meaning of advancing Jet2’s low-cost services. An obligation to use best endeavours to promote a business is not unenforceable merely because its precise limits are difficult to define. The critical distinction is between an obligation whose content is incapable of ascertainment and one that can be given practical content although breach may be fact-sensitive.

3. The low-cost model depended upon efficient aircraft use and therefore upon early and late movements. The parties knew that comparable airlines regularly operated outside the airport’s published hours. The obligation consequently required the airport to do all that it reasonably could to enable the business to succeed and grow, including accommodating out-of-hours flights subject to any legitimate right to protect its financial interests.

4. The airport could not treat the loss associated with each individual out-of-hours movement as sufficient to defeat the obligation. Whether a best-endeavours promisor may protect its own commercial interests depends on the particular contract. Financial cost may be inherent in such an undertaking. The position might differ if the supported business became incapable of profitable operation, but that question did not arise.

5. Longmore LJ added that the established course of performance was an essential consideration. Once out-of-hours operation had proceeded without difficulty for four years, the party seeking abruptly to change that position needed a justifiable explanation. None had been shown.

6. The judge correctly refused a declaration fixing the airport’s obligations for the contract’s remaining duration. Future circumstances might justify a refusal, after proper notice, to continue handling out-of-hours movements.

7. Estoppel by convention required cogent evidence of a common assumption, communicated between the parties, that Jet2 possessed an enforceable right to insist upon out-of-hours handling. The history of submitting and accepting schedules demonstrated business co-operation, but not the required shared legal assumption.

1. Court of Appeal (Civil Division): By a majority, dismissed the airport’s appeal and upheld the order below: [2012] EWCA Civ 417.
2. High Court, Queen’s Bench Division, Commercial Court: His Honour Judge Mackie QC held that the airport breached the Letter Agreement by refusing out-of-hours flights, but declined to grant the declaration sought by Jet2: [2011] EWHC 1529 (Comm).