Today I was reminded of the phrase every effort. I mention it in this 2004 article, but not in MSCD. Here’s an example from EDGAR:
The Investment Manager represents that it shall make every effort to ensure that the Fund continuously qualifies as a Regulated Investment Company under Subchapter M of the Code or any successor provision.
This phrase serves as a reminder of the role of rhetoric in efforts provisions. More specifically, it reminds one that it’s fatuous to interpret efforts provisions literally. Here are the contortions that the literal-minded would have to put themselves through to do so: “If a provision uses reasonable efforts, it imposes an obligation to act reasonably. If it uses best efforts, it imposes an obligation to, uh, use efforts that are better than reasonable efforts, so you have to try harder. And if it uses every effort, that imposes an obligation to use, uh, every effort! The party in question isn’t allowed to do anything else!” *head explodes*
If you still think that it’s helpful to use efforts provisions to cover a spectrum of onerousness, listen up: In the real world, all efforts variants convey the same meaning, but some incorporate a rhetorical flourish that tells the listener, Hey, I care! Because you can count on people either being oblivious to the semantics of efforts provisions or ignoring them in an attempt to insert unintended meaning into a contract, your best bet is to use only reasonable efforts.
7 thoughts on ““Every Effort””
Ken, since you’re back on the subject of best efforts vs. reasonable efforts, let me propose another way to look at it: Think of “reasonable” efforts as efforts that would get a passing grade from experienced business people. The problem is that there can be a wide spectrum of “reasonable” efforts; an A is a passing grade, but so is a D. When a contract specifies “best efforts” instead of “reasonable efforts” in a contract, it (probably) means that the non-obligated party wanted an A-level effort and not a mere D-level effort. This is vague, I grant you, but business people have been known to insist on distinguishing the two.
My aim wasn’t to reopen this issue, just to add an additional gloss. For the same old reasons, I find your analysis unhelpful.
I agree it’s silly to use anything other than “reasonable efforts” when drafting a contract, but how about when you’re reviewing a contract from the other side that uses “best efforts” or “every effort”? I always try to replace with “reasonable” when possible, but if the other party is insistent, is it worth fighting tooth and nail over? Or do you think a court would likely interpret it as only requiring “reasonable efforts” anyway? My hunch is that some (maybe most) judges would see “best” or “every” as requiring something more than “reasonable”.
I wrote MSCD so those working with contracts wouldn’t have to rely on hunches. In chapter 8, I show that U.S. courts have in effect said with one voice that all efforts standards mean reasonable efforts.
If the other side insists on using a best efforts standard, I’d tell them that you’re going to accept it, but that you don’t agree that it means anything other than reasonable efforts, and that if it becomes an issue, you’ll be willing to go to court. In other words, that you don’t have a meeting of the minds on that issue.
Should have read that chapter first. Thanks, Ken!
How about this:
“The Investment Manager warrants that [during the Term] the Fund continuously qualifies as a Regulated Investment Company under Subchapter M of the Code or any successor provision.”
This would overcome the effort issue. If the Fund ceases to qualify, the Investment Manager would be in breach.
You want to use language of declaration? Using “warrants”? With respect to the future? The question is, What category of contract language should this provision be? (If that question doesn’t make sense to you, you might want to consult chapter 3 of MSCD.) I say it should be language of obligation. (See one of D.C.’s comments below, and my reply.)