A Prototype of a New Definition of “Reasonable Efforts”

MSCD 8.56 suggests that you might want to use the phrase reasonable efforts as a defined term:

Even though the phrase reasonable efforts doesn’t pose the same risk of confusion as best efforts, you might want to use it as a defined term. Doing so could assist a court and might help the parties better understand the implications of using reasonable efforts. And in the definition the parties could fine-tune their understanding of what reasonable efforts means.

So MSCD 8.57 offers the following as a “core” definition:

“Reasonable Efforts” means, with respect to a given obligation, the efforts that a reasonable person in [the promisor’s] [Acme’s] position would use to comply with that obligation as promptly as possible.

Well, I suggest that we consign that definition to the dustbin of history and use instead this one, or something like it:

“Reasonable Efforts” means, with respect to activity conduct under this agreement, the efforts that a reasonable person in the position of the applicable party would use to engage in that activity conduct effectively.

Here’s why:

• For a definition to apply in all contexts, it has to take into account that reasonable efforts isn’t used exclusively in obligations. Namely, it could also be used in a conditional clause (If Acme failsi to use reasonable efforts …) or even in a statement of fact (Acme states that it has used reasonable efforts …).

• Saying the applicable party reflects that reasonable efforts isn’t limited to obligations. And it has the further advantage of being generic.
• Use of reasonable efforts isn’t just about getting something done as quickly as possible. It might not even relate to accomplishing a specific task. Instead, it might be a matter of maintaining a status, or stopping something from happening. It would make sense to elucidate in the reasonable efforts provision the parties’ expectations regarding the activity in question.

• Initially I used activity, but I replaced it with conduct, as that could encompass doing something or not doing it.

• A reader pointed out that if reasonable efforts is used in a conditional clause or statement of fact, it could apply to a nonparty, for example a subsidiary. If that’s the case, you could add or nonparty to my definition.

• An earlier version of this definition had the phrase taking into account the circumstances tacked on at the end, but I decided it was surplussage: saying in the position of the applicable party achieves the same effect.

This definition could be customized for a particular contract. For example, if reasonable efforts is used only in obligations. And if all instances of reasonable efforts apply to only one party.

So, readers, do your darnedest.