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
activityconduct under this agreement, the efforts that a reasonable person in the position of the applicable party would use to engage in thatactivityconduct 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.
“Reasonable efforts” means the efforts a reasonable person, charged with achieving a goal, would make to achieve it.
Interesting. If you think it helpful to include the concept “in the position of the applicable party,” you’d have to go with my version. And “achieving a goal” expresses only part of the universe.
You are a strict taskmaster.
(a) My thinking was that ‘in the position of the applicable party’ need not be in the definition of ‘reasonable efforts’ because that position and that party would be made clear in the context that used the defined term. As usual I could be wrong, but the proof of the pudding is in the eating.
(b) As for the partial nature of achieving a goal, I would have thought that every effort in the universe of efforts aims at a goal — aimless conduct isn’t an ‘effort’. But, bowing to your dictum, does the following fix it (it surely makes it about as generic as one can get)?
‘Reasonable efforts’ means the efforts a reasonable person aiming to discharge a duty to make those efforts would make.
I hasten to note that the actor need not be under a duty to make the efforts. But the efforts must be *like* those of one under a duty.
I think the most salient part of AWB’s critique is that “person” should be used instead of “party,” which obviates the concern about whether a subsidiary or some other person referred to in the contract was covered by the definition.
That opens the person versus entity can of worms. I think adding or nonparty is an economical way to handle this.
Well, yes, but I assume that anyone drafting in accordance with MSCD would have a definition of “person” that includes individuals and entities.
While you guys bickered, I planed the text a little more:
‘Reasonable efforts’ means efforts reasonably calculated to achieve their aim.
This works even where ‘reasonable efforts’ isn’t used in obligations, as in ‘if Acme fails to use reasonable efforts’ and ‘Acme states that it has used reasonable efforts’.
We’re at risk of shaving the definition down to nothing: reasonable efforts is what’s reasonable. Maybe we don’t need any more.
This is an issue because unlike most contract definitions, this is a lexical definition.
So this whole thing is about the defenders of ‘best endeavours’ (BE)? They tell you that ‘reasonable endeavours’ (RE) is an objective standard and BE is a subjective standard, and when they want the subjective standard, they use BE, which is therefore justified in some circumstances? This drives you to want to sharpen up the definition of RE to wrong-foot them? Hmm.
Maybe the better approach, which I think you have taken in the past, is simply to point out that BE are either reasonable or not reasonable. If reasonable, the RE phrase covers the ground — no need for the BE phrase. If on the other hand BE are ever not reasonable, they’re also unworkable and therefore out of place in contract law. (This analysis makes the objective/subjective issue an irrelevant sideshow.)
Leaving two questions: (1) Need ‘RE’ be formally defined at all? (2) If so, how? My answers: (1) No, because it’s obvious that the phrase invokes the ‘reasonable person’ standard (even without explicit mention of the Clapham omnibus); (2) If one insists on having a definition of RE, its main purpose is to invoke the ‘reasonable person’ standard, which takes only a few words.
No, this isn’t about best efforts. It’s about some people apparently not understanding what reasonable efforts means. Is that risk great enough to warrant the definition? I don’t know.
Ken:
“Reasonable efforts” means whatever the most recent edition of Kenneth Adams’ A Manual on Style for Contract Drafting says it means.
No?
Chris
Attaboy!
Ken,
I’m pretty sure you’ll agree that there’s no difference between this definition and what people probably mean wehn they use “commercially reasonable efforts.”
Now one that I’m not so sure you’ll agree with. I think “with respect to conduct under this agreement” is superfluous. What else would it be with respect to?
Yeah, I think you’re right about the with respect to bit. Thanks!
But I think it’s a mistake to use the defined term Person. We’re referring here to a “reasonable person” construct, not to a particular individual or entity.
I agree that the point is to establish that it’s an objective rather than subjective standard.
In a couple of days I’ll adjust my language accordingly.
I’m not sure I follow you on the problem with using the defined term “Person,” but I will not be at all surprised if there are better ways to ditch the “with respect to” part without using the defined term. I look forward to seeing what you come up with.
Hi, how can I use the ongoing obligation of “reasonable efforts” in a conditional clause to perform an instant obligation? That is, how can I guarantee that the reasonable efforts of the other party would continue past the point at which I fulfill my obligation (which is an assignment of rights)? Thank you,
Sorry, I don’t understand the question.