Yesterday I saw this article on JDSupra. It’s entitled Merger and Purchase Agreements Governed by Maryland Law: “Best Efforts”, and it’s by Scott Wilson of the law firm Miles & Stockbridge.
Consider the following extract:
The most commonly utilized terms are “best efforts,” “reasonable best efforts” and “commercially reasonable efforts.” Practitioners understand these terms on a sliding scale with “best efforts” comprising the most onerous obligation and “commercially reasonable efforts” the least. Given the uneven application of these standards in other jurisdictions, particularly New York, distinguishing among these terms can be important. But drawing distinctions under Maryland law is difficult.
While other jurisdictions hold that the term “best efforts” requires the promisor to do everything possible to achieve a desired result, resulting in a near fiduciary level of obligation of total efforts, Maryland courts reject that view. Instead, Maryland courts hold that “best efforts” requires good faith (an implied covenant in every contract) and diligence on the part of the promisor, but does not require that the promisor give “all of its efforts” or disregard its own interests.
The reference to what practitioners think is accurate. And what the article says about Maryland law is roughly what I’d expect. But the summary of caselaw in other jurisdictions is wrong. Like courts in Maryland, courts elsewhere in the United States don’t draw distinctions between different efforts standards. (MSCD points out a couple of meaningless exceptions.)
That might not matter to the author of this article; perhaps he works exclusively on deals governed by Maryland law. But he’s up on a soapbox broadcasting misinformation. That’s not great.
There’s plenty of other misinformation out there; perhaps he relied on that. For examples, see this post, and this post, and this post. But that wouldn’t do him credit either.
I don’t think I’m being petty and a bully in pointing this out. In the marketplace of ideas, you don’t get points for trying. The legal industry is a big, complicated business with a lot at stake for lawyers and their clients. I and many others like me try to do our bit to reduce the confusion. Perhaps that’s out of fashion in “post-truth” America, but I’ll remain on the job. If you spout misinformation in the marketplace of ideas, you’re just making things more difficult for the rest of us, and I’ll take the liberty of rapping you on the knuckles with my truncheon.
By the way, readers of this blog will know that the caselaw on efforts is ultimately beside the point. Use only reasonable efforts; all other efforts standards are an illusion.
4 thoughts on “More Misinformation on “Efforts” (And Why I Care About Standards in the Marketplace of Ideas)”
Perhaps worth saying that there is quite a lot of case law in England as to what “best endeavours” means (I think we can take “efforts” and “endeavours” as being synonymous, but I’m open to someone arguing otherwise).
Clearly the interpretation of the contract depends on the context, but “best endeavours” surely means something better than “second best endeavours”.
One gloss, from a case as early as 1911, is: “all those steps in their power which are capable of producing the desired results … being steps which a prudent, determined and reasonable [person], acting in his own interests and desiring to achieve that result, would take”.
So there is still an element of reasonableness in determining what “best endeavours” requires, but there is clear case law that “reasonable endeavours” is a less stringent obligation. For an example, see Rhodia v Huntsman, [http://www.bailii.org/ew/cases/EWHC/Comm/2007/292.html] at para 30 to 35. And a suggestion that “best endeavours” is close to “all reasonable endeavours” – that is, doing everything that the party reasonably can do – whereas “reasonable endeavours” might just mean them taking just one of the various different reasonable courses of action.
Hi. I assume you’re new to this blog and my work. There’s no way to break this to you gently: the English caselaw on endeavours is a disgrace; see my article at https://www.adamsdrafting.com/wp-content/uploads/2014/10/Endeavours-Solicitors-Journal.pdf.
Regarding the word endeavours, I suggest you join the twenty-first century and use efforts; see my post at https://www.adamsdrafting.com/english-contract-drafters-should-consider-using-efforts-instead-of-endeavours/.
And here’s my my most recent post on the English approach: https://www.adamsdrafting.com/my-position-on-endeavours-is-a-lonely-one/.
Relatively new, yes, so thanks for the links. And apologies for trying to teach you to suck eggs. But I will press on :)
Your 2014 article argues that “best” and “reasonable” mean the same thing. With respect, I disagree.
As you say, it may be “misbegotten literalmindedness” (!), but as I think you have found, UK lawyers believe there is a difference between the various standards of “endeavours” (a perfectly normal word, by the way). And, more importantly, the judges seem to agree (that said, the judges are not making this up: they are deciding between the propositions put to them by the lawyers for the parties in the cases).
It is the essence of contractual construction that the same words can have different meanings in different contexts. Perhaps you are looking for consistency of meaning where it is impossible? And indeed insisting that words mean what you say they should mean, nothing more and nothing less?
Similarly, you complain about verbs being treated as code words. There is considerable caselaw on the distinction between representations and warranties. Perhaps that is hard to justify, but I’m sorry, that is just the way it is. It would take a brave judge to challenge the judicial consensus, and I expect they would be overturned on appeal.
I don’t care what people believe. People believe all sorts of nonsense. And that includes judges. The semantics underlying my arguments about efforts, and represents and warrants for that matter, are unimpeachable.
And endeavours is a perfectly good word? Well, efforts is more modern. End of story.
I do my stuff for people who have the semantic acuity to understand that it’s the path of least risk. That doesn’t include you.