A reader passed on to me a “Commercial Contracts Newsflash” that he received from the international law firm Ashurst. It concerns Rhodia International Holdings Ltd. v. Huntsman International LLC,  EWHC 292 (Comm), an English case decided on February 21, 2007, by the Queen’s Bench Division. (Click here for a copy of this case; as for the Newsflash, it doesn’t appear to be available online.)
In this case, the judge offers in dictum the following thoughts on the distinction between best endeavours and reasonable endeavours:
I am not convinced that (apart from that decision of Rougier J) any of the judges in the cases upon which Mr Beazley relied were directing their minds specifically to the issue whether “best endeavours” and “reasonable endeavours” mean the same thing. As a matter of language and business common sense, untrammelled by authority, one would surely conclude that they did not. This is because there may be a number of reasonable courses which could be taken in a given situation to achieve a particular aim. An obligation to use reasonable endeavours to achieve the aim probably only requires a party to take one reasonable course, not all of them, whereas an obligation to use best endeavours probably requires a party to take all the reasonable courses he can. In that context, it may well be that an obligation to use all reasonable endeavours equates with using best endeavours and it seems to me that is essentially what Mustill J is saying in the Overseas Buyers case. One has a similar sense from a later passage at the end of the judgment of Buckley LJ in IBM v Rockware Glass at 343, to which Mr Edwards-Stuart QC for Huntsman drew my attention.
Without further ado, let me suggest that this is codswallop.
If I say, “To the best of my knowledge, my goat didn’t eat your daffodils,” the phrase the best of doesn’t serve to indicate that I’m calling on a higher level of knowledge that I wouldn’t be tapping into if I merely said “To my knowledge, my goat didn’t eat your daffodils.”
Instead, my adding the best of simply represents a way of my acknowledging that in terms of its formality and perhaps importance, the matter of the goat and the daffodils comes a notch above the mundane.
The best in best endeavours and its U.S. counterpart, best efforts, serves the same function. (In the interests of concision, in the remainder of this post I’ll be referring just to efforts rather than to efforts and endeavours.) That’s why in the U.S., courts construing best efforts and other efforts formulations have variously said that the standard is one of good faith, reasonableness, or diligence, regardless of the formulation. (I’ve written about this in chapter 7 of MSCD and in this article.)
More generally, the idea that best efforts represents a higher standard than reasonable efforts is an inherently unpromising one. In invoking that standard, you’d essentially be saying “I’m not insisting that you act reasonably. Instead, I’m insisting that you act unreasonably!” I’d just as soon not have to make that argument.
So much for the judge’s assertion that “as a matter of language and business common sense … one would surely conclude” that best endeavours and reasonable endeavours do not mean the same thing. And his attempt to flesh out the distinction is too skimpy and circular to be of use. But in his defense, innumerable practitioners are under the same misapprehension.
So what’s a practitioner to do? Here are my suggestions:
- If you want a party to be held to a reasonableness standard, use the phrase reasonable efforts, not best efforts. If the context is a sensitive one, use reasonable efforts as a defined term. (For suggestions on how to define reasonable efforts, see this article.)
- If you want to impose on a party a duty to make efforts beyond the efforts that would be required under a reasonable efforts standard, impose explicit obligations rather than relying on a vague efforts standard.
- If the other side in a transaction insists that your client be subject to a best efforts standard, suggest to them gently that the better analysis is that best efforts and reasonable efforts mean the same thing. Try to assess what particular obligations, if any, they have in mind and attempt to address them directly.
These recommendations are broadly in line with the suggestions that Ashurst makes in its Newsflash.