One of my students asked me recently if in US law «best efforts» and «reasMOVA LOGOonable efforts» have equivalent meaning when inserted in a contract clause. This is an unsettled area which deserves careful consideration.

Contrary to our common sense, which dictates that best efforts implies a much higher standard, case law does not support the argument that «best efforts»  and «reasonable efforts» represent different standards.

Most courts have held that «best efforts» does not require that a party has to do everything within its power, regardless of the detriment to it. See, e.g., Coady Corp. v. Toyota Motor Distrib., 361 F.3d 50, 59 (1st Cir. 2004) (“‘Best efforts’…cannot mean everything possible under the sun…”). In this line, some courts have held that the appropriate standard is one of good faith in light of one’s own capabilities); W. Geophysical Co. of Am. v. Bolt Assocs., Inc., 584 F.2d 1164, 1171 (2d Cir. 1978). But more recent cases have held that the standard is higher than that of good faith. See Satellite Broad. Cable, Inc. v. Telefonica De Espana, 807 F. Supp. 210, 217 (D.P.R. 1992) (holding that the net effect of the “best efforts” clause at issue was “to expand extra-contractual damages beyond a mere good faith requirement”). As an alternative to a good faith standard, some recent cases have used a reasonableness standard and others a diligence standard.

When drafting these types of clauses, several variations are used: best efforts, reasonable efforts, best reasonable efforts, comercially reasonable efforts, diligent efforts. All these terms mean the same thing as best efforts, unless a contract definition provides otherwise. (1)

However, there is some uncertainty, and a court could hold that a party subject to a «best efforts» clause was obligated to make efforts out of proportion to the benefits to it under the contract in question, (2)  this issue requires precise drafting. In order to require that a party acts diligently when performing a contract, the best option would be to define the term best efforts and to list examples of what is excluded from the efforts required under the clause.

(1) (2) ADAMS, Kenneth, “Understanding “Best Efforts” And Its Variants”, The Practical Lawyer, August 2004