Miscellaneous Notes on “Efforts”

One can never have enough on efforts, it seems. Here are three notes on efforts.

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First, thanks to a reader tip I learned of this post on Sheppard Mullin’s Corporate & Securities Law Blog, entitled What Are “Commercially Reasonable Efforts” in M&A Transactions? Some observations.

The post says as follows:

New York courts have suggested that when parties fail to contract for a clear set of guidelines against which to measure the contracted-for efforts, then courts can enforce an efforts clause only when external circumstances impart sufficient certainty to the meaning of the efforts clause, thereby serving as gap fillers.

In so saying, I think this post falls into the trap of generalizing unduly from one case. Another recent article (here) comes to a different conclusion on this same point:

The case law in New York nominally requires “a clear set of guidelines against which to measure a party’s best efforts” to enforce such a provision. See TPTCC NY v. Radiation Therapy Servs., 784 F. Supp. 2d 485, 506-07 (S.D.N.Y.), quoting Mocca Lounge v. Misak, 94 A.D.2d 761, 763, 462 N.Y.S. 2d 704 (2d Dep’t 1983). But the phrase appears so often and in so many contracts that courts are loathe to invalidate it even in the absence of guidelines on the face of the contract.

(I discuss that article in this post.)

It doesn’t make sense to expect drafters to offer much in the way of guidelines for interpreting efforts provisions: the whole point of efforts provisions is that drafters use them when they can’t or don’t want to be specific.

Furthermore, although the author notes at the outset that neither Delaware nor New York courts have articulated a sliding scale of efforts standards, she seems to hanker for one. For example, consider the following extract:

Delaware courts have tended to use “reasonable best efforts” and “best efforts” interchangeably. This is at odds with the recent rulings in WP CMI and Williams, in which the court clearly equates “reasonable” with “objective.”

But assuming that in this context reasonable and best express different meanings requires that one be oblivious to the semantics. For more on that, see MSCD chapter 8.

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Second, someone on Twitter sent me a link to this Strafford webinar, entitled “Best Efforts and Commercially Reasonable Efforts in M&A Agreements: Drafting and Interpretation Challenges.”

I noticed the following in the description of the webinar:

In some states, “reasonable efforts” or “commercially reasonable efforts” provisions are instead [of “best efforts”] used to convey the parties’ expected performance under the contract.

That could be understood as suggesting that from state to state, drafters vary in which efforts standards they employ. That’s a bizarre notion. Instead, courts opine on whatever efforts jetsam comes their way.

And the webinar description promises that the panel will discuss the following:

How are “best efforts,” “reasonable best efforts” and “commercially reasonable efforts” different?

If the answer given is anything other than, They’re not! And don’t use anything other than “reasonable efforts”, I’d ask for my money back. Yes, I acknowledge that the notion that different efforts standards mean different things is still at large. See for example this 2015 post. But it’s a good idea to mock it whenever it rears its head.

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And third, over the years I’ve said that U.S. drafters use efforts and English drafters use endeavours.

But today I belatedly got around to searching on EDGAR for endeavors—the U.S. spelling. Lo and behold, I guesstimate that a couple of hundred contracts filed in the last year use an endeavors variant. So we can add endeavors to the endless efforts variants on display in U.S. contracts. (See this post and this post for two recent oddities.)

And one can expect that the converse holds true—that some contracts drafted in England use efforts. Given that English courts have mistakenly attributed different meanings to different endeavours variants, I wonder how they’d react if efforts variants were added to the mix. (It so happens that I’ve recommended that English drafters dump endeavours; see this 2014 post.)

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.