For example, the contract may require that a third party be contacted by a certain date to confirm a transaction. If they were not reachable by phone, but a message was left, it could be a “reasonable effort” to reach them. Multiple phone calls and messages can be considered “best efforts.” If these phone calls were followed by letters, emails, text messages and letters to personally convey the message directly to the party, it could show that “all reasonable efforts” were made to fulfill the obligation. Since this can be a contentious area of contract law, the success of enforcement in a dispute depends very much on the interpretation and context of the case. The “nothing returned” test was applied to contracts covering a wide range of subjects. In addition, courts routinely imply a clause in contracts that the parties will make reasonable efforts to perform their respective contractual obligations. If the parties include a “best effort” clause in a contract, as they did in this case, they must certainly intend to do more than “reasonable efforts.” The three most commonly used clauses are “best efforts”, “reasonable efforts” and “commercially reasonable efforts”. Lawyers and contractors generally consider best efforts to be the most demanding, economically reasonable efforts to be the least important, and reasonable efforts to be the middle ground. As discussed below, what counsel and parties believe is not necessarily what the case law dictates. The legal interpretation of a Best Endeavours obligation is that it imposes an obligation on the party to make all reasonable efforts to achieve the desired result. On the other hand, the duty to make reasonable efforts may require the party not to take more than one course of action before deeming the task unfeasible. Like any document that attempts to regulate behaviour, contracts are scrutinized much more closely than other forms of communication. In a dispute, an aggrieved party will attempt to extract a desired but not necessarily obvious meaning from a particular sentence or, if necessary, its constituent elements.
Not surprisingly, litigants have agreed on the meaning of the dictionary of the best – “surpassing all others” – to argue, regardless of the idiomatic use of the phrase “best efforts,” that a commitment to do one`s best actually requires one party to take extraordinary action. As problematic as this meaning may be, it has proven plausible enough to make the best efforts ambiguous. Writers use a confusing variety of experimental phrases. An informal survey of contracts filed as “material contracts” in the Securities and Exchange Commission`s EDGAR system suggests that the most widely used terms are best efforts, reasonable efforts, commercially reasonable efforts, and reasonable best efforts. Good faith efforts, diligent efforts, commercially reasonable efforts and all efforts are also used. The quality of the effort can approach the bizarre, as in reasonable efforts at best. On the other hand, there is also case law in New York that supports the proposition that a best effort standard is more onerous than a reasonable effort standard. As a result of this series of cases, courts often define the standard by using the implied duty of good faith and loyalty (as the basic standard expected in all New York contracts) to declare that a best effort clause (i) requires a higher standard than mere good faith, and (ii) a party pursues all reasonable methods, in order to achieve the result in question.
But this superficial contrast between best and reasonable efforts shows that the idea that best efforts require extraordinary measures is erroneous and incompatible with the idiomatic sense of best efforts. On the one hand, if best efforts were a higher standard than reasonable efforts, then anyone who is compelled to do their best would run the risk of having to act more than reasonably – in other words, unreasonable – to comply with that obligation. This is an inherently dubious proposition. Moreover, there would be no basis for determining when an obligation was fulfilled to the best of its ability – to what extent would one have to act unreasonably to meet a standard of unreasonableness? The importance of “exceptional measures” for best efforts is therefore an impractical standard. Justice Dorgan noted that the “best efforts” standard was an onerous standard, exemplified by the phrase “nothing wrong,” albeit in the general context and purpose of the contract itself, and was more onerous than “reasonable effort.” Justice Dorgan`s analysis of “best efforts” in atmospheric diving has been confirmed by a number of Canadian decisions.5 I discuss best efforts in MSCD and blog about it a few times (looking for “best efforts” and “best efforts”), but I found that I hadn`t done enough research on semantics. One result is the use of the term “reasonable effort” in contracts. (Best efforts are used in colloquial English, but reasonable efforts are not – its use is essentially limited to contracts.) Reasonable effort refers to the efforts that a reasonable person would make in the circumstances. Therefore, reasonable efforts are not subject to the additional meaning grafted on best efforts – it could not reasonably be suggested that a party required to make reasonable efforts must take extraordinary measures. The underlying reason for this distinction is that, in everyday language, it is preferable to present a higher standard as reasonable. But semantically – at least in the context of the term best efforts – this is a problematic proposition.
Finally, some courts compare a provision of remedies to a contractual obligation to perform promptly or expeditiously.