Often, in contracts, a clause will provide that rather than achieve a specified objective, a party to the contract must use ‘Best Efforts’ or ‘Reasonable Efforts’ or, from time to time, ‘Best Reasonable Efforts,’ and ‘All Reasonable Efforts,’ and ‘Commercially Reasonable Efforts.’ (Alternately the word ‘Endeavours’ (Endeavors or in American English (sometimes also ‘Endevors’) may be used instead of efforts.) The use of such language often leads to heated argument in negotiation, especially as between the use of Best versus Reasonable. This is not helped by the reality that even between anglophone jurisdictions, and indeed native English speakers, there is little consistency in the usage and interpretation of these terms. Consequently, in some jurisdictions the courts have held that efforts clauses, unless elaborated upon, are so usually so vague, indefinite and uncertain as to be unenforceable. Nonetheless, such ‘Efforts’ clauses are extremely common in English language contracts. Many people have a fixed idea of what such clauses mean, which is dangerous because they have no fixed or clear meaning.
It is broadly recognized that Best Efforts implies a higher level of effort than Reasonable Efforts – but exactly what the difference is has not been clearly defined by the courts. Many practitioners take the view that use of the term ‘Reasonable’ implies that the party subject to the obligation can take into account the economic reasonableness of the required efforts, while ‘Best’ merely requires feasibility of the efforts. However, if in a contract there is a clause which includes the term ‘Commercially Reasonable’ efforts and others that do not contain that qualifier, then this might be seen as implying that the unqualified term is not subject to a cost limitation. In this theory there is a sort of sliding scale, from 5 at the hardest to 1 at the weakest obligation:
5. Best Efforts/Endeavo[u]rs;
4. Reasonable Best Efforts/Endeavo[u]rs;
3. All Reasonable Efforts/Endeavo[u]rs;
2. Reasonable Efforts/Endeavo[u]rs;
1. Commercially Reasonable Efforts/Endeavo[u]rs.
The reality is that at least common law courts (including US, English and anglophone courts) and indeed non-common law courts have not actually been able to come up with a consistent standard for any type of efforts/endeavours clause (indeed much of the caselaw is somewhat contradictory.) In particular, most courts have often held that Best Efforts clauses have a commercial reasonableness limitation – a party need not engage in efforts that would bankrupt it or place it (or its employees) in physical danger – but it may be required to take a loss on the ‘efforts’ deployed – within that proviso, ‘Best Efforts’ may be interpreted as to do all things feasible – one English court has held that it means to pursue all reasonable courses that might lead to the desired outcome, rather than a single reasonable course. ‘Reasonable’ has sometimes been considered as meaning ‘to do everything that on reasonable consideration might lead to the desired outcome,’ but that obviously futile efforts are not required (but then, what is ‘obviously futile?’)
All of the standards will generally be breached by inaction, unless the only available actions would be obviously futile and/or pointless. However, it should always be understood that ‘Efforts’ clauses, without further definition, are fundamentally unclear and will usually be interpreted in light of the rest of the contract, ancillary documents and industry practice. Moreover, they are not a reliable alternative to carefully laying out each party’s obligations. If such a clause ends up being ligated, the results are hard to predict and likely to be both jurisdiction, fact and even judge/arbitrator dependent.