The Moment “Reasonable Endeavours” Met a Shock to the Entire Market
When a global-scale disruption forced the High Court to decide how far a contractual promise really extends
This case shows that even when a contract uses the strongest cooperation language — “reasonable endeavours” — a party is not required to sacrifice its own commercial interests when the market changes overnight.
Home › Case Studies › Case Law Library › Commercial & Business Cases › Contract Interpretation › Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA
Published: 10 November 2025 | Reviewed: 5 December 2025
(3-minute read)
What Happened in the Case
Electricity Generation Corporation (Verve Energy) relied on long-term gas contracts to power Western Australia’s electricity grid. The contract required Woodside Energy to use “reasonable endeavours” to supply extra gas (SMDQ) when Verve needed more than its ordinary daily quantity.
Then the unexpected happened.
A gas production facility operated by Apache Energy ruptured and shut down. Western Australia suddenly lost around a third of its gas supply. Prices surged across the entire market.
Verve asked Woodside for extra gas at the contract rate. Woodside declined, saying it was not “able” to supply SMDQ given the severe market disruption and the need to consider its broader commercial operations. It instead offered gas under short-term contracts at much higher prices.
Verve protested, purchased the expensive gas under pressure, and later sued, arguing Woodside had breached its “reasonable endeavours” obligation.
What the High Court Decided
The High Court unanimously rejected Verve’s claim.
The Court held that Woodside’s obligation was qualified by the contract’s language. To determine whether Woodside was “able” to supply supplemental gas, the contract required consideration of:
commercial matters
economic matters
operational matters
The gas crisis dramatically changed all three. Woodside was therefore not required to supply extra gas at the earlier contract rate.
The Court affirmed a core rule of Australian contract interpretation:
A commercial contract must be understood as a reasonable businessperson would understand it.
This rule, often called the “commercial sense” principle, ensures courts do not interpret obligations in a way that undermines a party’s legitimate commercial interests unless the contract clearly requires that sacrifice.
Why This Judgment Still Matters
Woodside is one of the most important modern cases on how courts read commercial agreements.
It clarified that:
“reasonable endeavours” does not mean doing everything possible
a party may consider its own commercial position
a sudden change in market conditions is relevant to what the contract requires
the meaning of a contract turns on business reality, not literal interpretation
Today, Woodside is cited across industries:
energy supply
construction and infrastructure
technology and SaaS service levels
logistics and manufacturing agreements
financial markets and commodity contracts
Whenever a contract includes “reasonable endeavours”, “best endeavours”, or “able to supply”, the Woodside reasoning determines the boundary between expectation and obligation.
Its message is structural: a contract must make commercial sense at the time performance is assessed, not just at the time it was written.
How Problems Like This Quietly Happen
Woodside highlights a recurring risk in modern commercial life:
the contract seems clear
the parties assume conditions will remain stable
the market shifts suddenly
one party tries to enforce the original words without regard to changed circumstances
This creates a gap between commercial reality and contractual assumption, the very gap Woodside resolved through the reasonable businessperson test.
The Structural Fix — Cost Safety (One-Path Funding)
Woodside teaches that commercial sense must guide obligations when circumstances change.
Clean Law applies that same principle to cost control.
Cost Safety (One-Path Funding) ensures clients never pay for duplicated or misaligned legal strategies when conditions shift.
Under this protection:
clients fund one legal path at a time
all steps require prior approval through escrow
strategy changes do not create parallel cost exposure
financial clarity remains stable even when circumstances do not
It gives clients the commercial certainty that many contracts, including Verve’s, lacked when disruption hit.
Explore how Cost Safety keeps legal exposure controlled or
See the Hidden Risks in the Traditional Model
Reflection
Woodside endures because it connects contract law to commercial reality.
Businesses cannot be expected to ignore market conditions that fundamentally reshape their operations unless they have clearly agreed to do so.
The deeper lesson is structural.
Clarity prevents conflict.
Commercial sense prevents distortion.
And a well-designed system prevents costs from spiralling when circumstances change.
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640)
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Disclaimer: This page is intended to provide general information only and is not legal advice. The contents may not reflect the most current legal developments and do not take into account your individual circumstances. You should not act or refrain from acting on the basis of this information without obtaining legal advice tailored to your situation.
