A reader let me know that this New York Times article dated 13 November by Gretchen Morgenson contains the following paragraph:
Under the agreement, Sanofi would make “diligent efforts” to shepherd Lemtrada through the F.D.A. approval process and promote it as it would any drug. This set out a higher standard than Sanofi would have faced under an agreement to make only a “reasonable effort” with the drug.
Whoever told Gretchen that was either engaging in spin or is seriously misinformed. Not only does the proposed distinction not make sense, there’s also nothing in U.S. caselaw to support it.
For more on efforts, see MSCD chapter 8 as well as a bunch of blog posts; go here for one of the more recent ones.
But then, does the law distinguish among types of efforts? And if so, in what way?
No, they all mean reasonable efforts.
Ken, please feel free to explain your responses to any or all of the following questions. I’m posing them in a serious effort to understand your position and not as an attempt to bait you.
1. Is it your position that a party’s efforts to meet an objective cannot qualify as “reasonable efforts” unless the efforts rise to the level of “diligent efforts”?
2. Flipping the question around: Is it your position that a level of effort that would qualify as “reasonable efforts” will — ipso facto — satisfy a requirement to make “diligent efforts”?
3. Suppose that “Alice,” in an effort to achieve an Objective O, were to make a series of Efforts E1 through E3, but failed to achieve the stated objective. Suppose further that each of those actions E1 through E3, individually, would be thought of as a reasonable thing to try in pursuit of Objective O.
(I say “try” advisedly — we’re talking about efforts here.)
Now suppose that Efforts E4 through E10 had also been available to Alice, and that each of those Efforts E4 through E10, individually, would likewise be thought of as a reasonable thing to try in pursuit of Objective O.
QUESTION 2.1: On these facts — namely that Alice took only Efforts E1 through E3 instead of all of the available Efforts E1 through E10, and failed to achieve Objective O — is it _mandatory_ for us to conclude that Alice made “reasonable efforts” to achieve the objective?
QUESTION 2.2 Flipping it around again: On these facts, are we _prohibited_ from concluding that Alice made “reasonable efforts” to achieve Objective O?
QUESTION 2.3: On these facts, is it mandatory — or prohibited — for us to conclude that Alice made “diligent efforts” to achieve Objective O?
3. Same facts as in 2. Suppose further that reasonable people would have expected Efforts E1 through E(whatever) to be taken over, let’s say, the space of one week; Alice, though, waited a month between each of her (individually-reasonable) Efforts E1 through E3.
QUESTION 3.1: On these facts, is it mandatory — or prohibited — for us to find that Alice made “reasonable efforts” to achieve Objective O?
QUESTION 3.2: On these facts, is it mandatory — or prohibited — for us to find that Alice made “diligent efforts” to achieve Objective O?
4. Would you agree that a requirement to make “diligent efforts” could be paraphrased, in sports terms, as “bring your A game”?
5. Would you agree that, again in sports terms, a requirement to make “reasonable efforts” could be paraphrased as “bring at least your B game” — i.e., not necessarily your A game, but definitely not your D game?
Understood! But your questions bring to mind the approach underlying Zeno’s paradox of Achilles and the tortoise: you’re proposing nuances that don’t exist, as a matter of semantics and contract law. I don’t expect you to consider this a satisfactory explanation, but I’ll see whether I can better express my point in the next edition of MSCD.
Two quick comments:
1/ How odd that ‘This set out a higher standard than Sanofi would have faced under an agreement to make only a “reasonable effort” with the drug’ is utterly unsourced. It sounds like something said on the reporter’s own authority. Ken refers to ‘whoever told Gretchen that’, but shouldn’t Gretchen have *said* who told her that? I checked the article, and it doesn’t say who.
2/ If a contract requires more than reasonable efforts, it requires unreasonable efforts. If the contracting parties want a standard that requires one or more efforts, or types of efforts, or combinations of efforts, they should eschew vague words (of which ‘reasonable’ is one) and specify the efforts. ‘Diligent’ is another vague word and using it to mean ‘more than [and therefore not] reasonable’ is asking for trouble, which may or may not come, but it’s no way to draft. There are lots of ways to deal with particular situations. Look at this one: ‘If one party breaches this agreement, the non-breaching party may recover fair, just, and reasonable damages up to a cap of £1 million’. It leaves the vagueness untouched, but puts limits on it. The takeaway: if the vagueness of ‘reasonable’ won’t do, depart from vagueness altogether and get specific.
AWB, I’d be interested in your own take on the questions I posed to Ken up-thread.
In particular: If, in pursuit of an objective, there are (let’s say) ten reasonable things that one could try: Can one be said to have made “reasonable efforts” if one tries only three of those ten things? Or does “reasonable efforts” require trying all ten (assuming the first nine fail to achieve the objective)?
As to vagueness, business people are very often happy to assume that business risk, because in their view the greater overall risk is delay in getting the contract to signature.
To my mind judging when efforts are reasonable is an overall assessment of what was done. Not a matter of counting up all the (reasonable) things one could have done.
Having said that, some of the English case law that Ken despairs of does make the distinction that DC refers to, and suggests that, to answer his question “reasonable efforts” may be limited to E1, or perhaps E1-3, whereas “all reasonable efforts” equates to performing E1-10 (if that is the limit of E). Some of that case law goes on to suggest that “all reasonable” means the same as “best”. Personally, I think this is ridiculous. Thankfully, we don’t have the further embellishment, in English case law, of “commercially reasonable”.
Oh, it’ll show up.
DC,
Because you’ve defined each of E1-E10 as independently reasonable, a party would definitely be said to have made “reasonable efforts” even if a party tried only one of those things
It seems you’re actually asking a different question than the one you’ve posed. The problem with your question about trying all ten is in the definition of what’s reasonable–the question of how many things is reasonable is only relevant if you define “reasonable efforts” as trying most (or all) of the things reasonably calculated to achieve the goal. Unfortunately, I think that’s more properly stated as the question of diligence in accomplishing the goal than reasonableness in what you do to accomplish it.
Actually, Ben, I intentionally said that E1, E2, …, E10 was each a reasonable thing to try. I didn’t mean to imply that each one, standing alone, qualified as “reasonable efforts.” I agree with Mark that “judging when efforts are reasonable is an overall assessment of what was done.”
How many shades of vague must parties consider?