More Misinformation on “Efforts” (And Why I Care About Standards in the Marketplace of Ideas)

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.

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.