In connection with one of my Calgary seminars, someone suggest that my treatment of best efforts doesn’t apply in Canada. I thought I should address that, because if my analysis doesn’t work for Canada, it doesn’t work anywhere.
Chapter 7 of MSCD contains my analysis of efforts provisions, and I’ve also done a good number of blog posts on the subject. The gist of my analysis is that as a matter of semantics and contract dynamics, the only sensible interpretation is that best efforts means the same thing as reasonable efforts.
As regards semantics, if I say that I’ll use best efforts to buy tickets for the opening ceremonies of the Vancouver 2010 Winter Olympics, that doesn’t mean that I’ll be selling my earthly possessions and taking out bank loans in order to buy tickets. Instead, it means that taking into account my interest in winter sports and my financial resources, I’ll give it a darn good try. But lawyers aren’t good at idiom. Instead, they break best efforts down into its constituent components, determine that best means “exceeding all others,” and conclude that best efforts requires a level of effort beyond reasonable efforts. It’s a conclusion that bears no relation to actual usage.
As regards contract dynamics, holding that best efforts requires a level of effort beyond reasonable efforts would in effect impose on a contract party under a best-efforts obligation the need to behave other than reasonably—in other words, unreasonably. And that party would be entitled to wonder exactly what level of unreasonable effort would be required to satisfy the obligation. That’s an unworkable standard.
Caselaw has no bearing on this analysis—heaven forbid that I should seek guidance from courts on how to write clearly! Instead, caselaw is only of interest for purposes of showing what sort of mischief courts can make when it comes to analyzing efforts provisions.
In that regard, it’s notable that U.S. courts have been bastions of rationality, holding in essence that all efforts provisions mean reasonable efforts. At the other extreme are English courts, whose attempts to provide an analytical framework for understanding efforts (or rather endeavours) provisions have been fatuous. (See here, here, and here.)
Given that the language of contracts in English is essentially the same the world over, this discrepancy is astonishing. It’s hard to imagine that contract parties in the U.S. and England have completely differing notions of what best effort means. Instead, the discrepancy can only be due to the fact that the legalistic analysis of best efforts is at odds with regular English usage, the result being utter confusion.
It follows that Canadian caselaw is not going to change my analysis. The only question is how sensibly Canadian courts address the issue.
The principal Canadian case on best efforts is apparently an opinion of the British Columbia Supreme Court, Atmospheric Diving Systems Inc. v. International Hard Suits Inc. (1994), 89 B.C.L.R. (2d) 356 (S.C.). Here’s what the court had to say:
In summary, the principles extracted from the cases on the issue of “best efforts” are:
- “Best efforts” imposes a higher obligation than a “reasonable effort”.
- “Best efforts” means taking, in good faith, all reasonable steps to achieve the objective, carrying the process to its logical conclusion and leaving no stone unturned.
- “Best efforts” includes doing everything known to be usual, necessary and proper for ensuring the success of the endeavour.
- The meaning of “best efforts” is, however, not boundless. It must be approached in the light of the particular contract, the parties to it and the contract’s overall purpose as reflected in its language.
- While “best efforts” of the defendant must be subject to such overriding obligations as honesty and fair dealing, it is not necessary for the plaintiff to prove that the defendant acted in bad faith.
- Evidence of “inevitable failure” is relevant to the issue of causation of damage but not to the issues of liability. The onus to show that failure was inevitable regardless of whether the defendant made “best efforts” rests on the defendant.
- Evidence that the defendant, had it acted diligently, could have satisfied the “best efforts” test is relevant evidence that the defendant did not use its best efforts.
The “no stone unturned” test has been applied to contracting relating to a wide variety of subject matter. Further, courts routinely imply a term in contracts that the parties will make reasonable efforts to fulfil their respective contractual obligations. Where the parties include a “best efforts” clause in a contract, as they did in the case at bar, they must surely intend that something more than “reasonable efforts” be used.
Note how the court says that best efforts “means taking, in good faith, all reasonable steps to achieve the objective.” So best efforts is subject to a reasonableness standard—case closed. Everything else, “no stone unturned” and all, is so much fluff, and I have nothing particular to say about it.
In MSCD I recommend that you avoid best efforts and use instead reasonable efforts. In contracts governed by Canadian law, you could instead elect to use best efforts and bank on a court’s holding that it reflects a more demanding standard than reasonable efforts. But because that distinction is unworkable and couldn’t reflect any coherent intent of the parties, I’ll continue to recommend that you use reasonable efforts, whatever jurisdiction you’re in.
By the way, given how often I come to Canada it’s been remiss of me not to have written more about the Canadian caselaw. It’s not as if I wasn’t aware of Atmospheric Diving Systems. I recall that David Scrimshaw, proprietor of an engaging blog, told me about it in this comment.