In the early days of my rummaging through the entrails of contract language, I logged a lot of time with the second edition of Bryan Garner’s Dictionary of Modern Legal Usage. My recent visits have been fewer, but I did turn to the third edition, now called Garner’s Dictionary of Legal Usage, to see if it had anything to say about best efforts.
Sure enough, there’s an entry entitled best efforts; reasonable efforts; commercially reasonable efforts; good-faith efforts. What does it say? Since you ask, here’s the opening sentence:
The orthodox view is that a contractual provision requiring best efforts imposes extraordinary duties of assiduity: a very high standard of care, regardless of whether the required efforts might be commercially unreasonable. A provision requiring reasonable efforts is generally thought to impose a lesser standard of diligence.
“Orthodox” and “generally thought” in which constituency? Practitioners, sure, but certainly not judges. U.S. courts have in effect said, with essentially one voice, that all efforts provisions mean the same thing—reasonable efforts. For more on that, see the relevant chapter in MSCD.
The entry continues:
As noted, the majority view is for courts to consider best efforts as imposing a higher standard than reasonable efforts. But others treat the two as synonyms.
The majority view of courts? Maybe in England (here), Canada (here), even Singapore (here), but not in the U.S. Not even in cases that are reputed to stand for the distinction, a notable example being Bloor v. Falstaff Brewing.
Here’s the next sentence in the entry:
Perhaps the safest course is, when possible, to use a best-efforts provision when insisting on an opposite number’s performance—and to use a reasonable-efforts provision for one’s own client’s performance.
You might recall my post entitled “Active Drafting: A Short Manifesto,” in which I compared passive drafting to active drafting. I use the phrase “passive drafting” to describe the behaviors associated with uncritical copying of precedent contracts. One of them is a kind of learned helplessness when it comes to handling terms of art, something I discussed in this 2013 post. This recommendation by Garner has that quality about it.
To his credit, Garner acknowledges that the two phrases promote uncertainty. But instead of suggesting an approach that allows you to avoid any confusion, he recommends that you opt for whichever interpretation favors your side of the transaction. Then, presumably, you hope for the best. That explains the despairing tone of the next sentence:
Yet the phrases are fuzzy, the judicial decisions irreconcilable, and the effects admittedly uncertain.
I suggest that you not follow Garner’s recommendation. It encourages people to invest in the notion of a valid distinction between efforts provisions. That leads to time wasted in negotiation theater. And it interferes with a meeting of the minds, leaving open the possibility of dispute. In particular, it can lead to the potential mischief of two efforts standards in one contract.
You don’t have to accept this sort of uncertainty as an unfortunate feature of the landscape. Instead, it’s the drafter’s (and reviewer’s) responsibility to eliminate it. You aren’t limited to having to make the best of whatever the courts and conventional wisdom drop on your plate. Instead, you can take control and establish your own meaning.
Most of you will have already heard too many times my active-drafting take on efforts, but here goes anyway:
The confusion surrounding best efforts is inevitable, as the ostensible distinction between best efforts and reasonable efforts is unworkable. It doesn’t work in terms of idiom—in standard English, promising to use best efforts simply means that you’ll try hard, taking the circumstances into account. And it doesn’t work in terms of contract mechanics—seeking to impose an obligation to act more than reasonably is equivalent to seeking to impose an obligation to act unreasonably. So what do you do? You shun best efforts, as it promises more than it can deliver. You do that even in jurisdictions where courts have tried and, inevitably, failed to come up with a rational distinction. At the same time, you pay attention to broader issues in drafting efforts provisions: it’s not just about what phrase you use. For example, if you want to you can even make reasonable efforts mean what you thought best efforts meant, as I noted in this post.
Here’s how Garner closes out this entry:
For a useful analysis of these problems, see Kenneth A. Adams, A Manual of Style for Contract Drafting 133–47 (2d ed. 2008).
I’m pleased to have Garner point his many readers to something I’ve written. But even though he says my analysis is useful, you wouldn’t know it from this entry in Garner’s Dictionary of Legal Usage. If you’ve invested heavily in a given approach, you might fail to recognize alternatives that are sufficiently different as to be, yes, disruptive.
16 thoughts on “Some “Efforts” Advice That I Wouldn’t Give”
If your opposite number gives you a draft providing for a hierarchy of efforts, and you aren’t in a position to negotiate the provision out of the document, you can try to lessen the damage by proposing a hard-to-refuse provision that ‘no “efforts” provision in this agreement requires a party to behave unreasonably.’
Then any dispute over what a particular ‘efforts’ standard requires takes place within the realm of reason(ableness).
It’s second best to a unitary ‘efforts’ standard, of course, but a drafter mustn’t let unattainable perfection be the enemy of the available good.
AWright, I wonder whether Ken is unaware that he is =equating= best efforts with reasonable efforts, as opposed to saying what you just did.
In most situations, “reasonable efforts” will cover a range of possibilities; “best efforts” should refer to the higher portions of that range.
An analogy: On major U.S. highways, the speed-limit signs often include both maximum =and= minimum speeds of (say) 60 mph and 45 mph. Here’s the analogy:
= If you agree to a reasonable-efforts obligation, you’re obligated to drive at least 45 mph (the lower limit of reasonable efforts), but you need not drive faster than 60 mph (the upper limit of reasonable efforts).
= In contrast, if you agree to a best-efforts obligation, then driving at 45 mph won’t cut it, even though that’s in the range of reasonable efforts. You have to drive (let’s say) at least 58 mph, but you’re still not required to drive over 60 mph.
Certainly it’s usually not possible to quantify “best efforts” in that way, but the analogy illustrates the concept.
At this stage in the game, I’d say that when it comes to efforts I’m pretty aware of what I’m doing!
Your analogy incorporates explicit standards. That’s exactly what efforts provisions are not intended for. So I don’t think your analogy helps.
D.C. Toedt’s analogy expresses how the distinction is usually conceptualised by those that draw a distinction – “reasonable efforts” is at the floor of what is reasonable, where no reasonable person would do less, and best efforts is at the top where no reasonable person would do more. It assumes that different people, all reasonable, will take different approaches to to a task.
If the numbers are inappropriate, you can consider non-quantitative illustrations. Reasonable efforts to notify someone might be satisfied by dropping them an email, as that is how plenty of reasonable people would notify someone of something. But best efforts might require an email, followed by a call to confirm receipt, leaving a message with their secretary etc, none of which are unreasonable. (It probably wouldn’t include flying to Hawaii to deliver the message in person, though.)
I have some sympathy with the criticisms of this way of looking at things, and how easy it is to apply, but I do not believe it’s irrational.
I also suspect that when we focus on the meaning of “best efforts”, we might be looking at the wrong thing. From what I can tell of the position of those who believe there is no difference, it is actually the analysis of “reasonable efforts” that is different to (i.e. more onerous than) that set out above, so the dispute is really over the meaning of “reasonable efforts” itself, not “best efforts”. I take this from the statement sometimes made by Ken that anything more than “reasonable efforts” is by definition unreasonable, which isn’t true of the “email only” concept of reasonable efforts, but is true if “reasonable efforts” already requires the follow-up call etc.
Belief doesn’t come into it, just as belief doesn’t come into my observing that the tooth-fairy doesn’t exist: my views are based on my objectively assessing the evidence.
It’s those who persist in the distinction who are straying into faith-based drafting. Once can dream up all sorts of quantitative or non-quantitative scenarios, but expecting people to reverse-engineer them through variations in efforts provisions in fraught with peril.
And that’s the key point: the confusion exists, and insisting on employing best efforts in the face of that confusion, that’s what’s irrational.
That might come across as insulting, but I’m just being candid.
Put differently, that notion of different standards that you might wish to incorporate in a contract is incredibly reasonable and precise — and helpful.
But “best efforts” doesn’t reliably mean that, and so I’d say that one would want to define that standard explicitly (and probably choose a different defined term than “best efforts”) and be much more sure of the outcome.
It becomes important, in establishing the context in which reasonableness is determined, to distinguish between doing a task and accomplishing a result. Thus, in the case of notice, reasonable efforts to give notice (which is itself a bit of a red herring in that notice provisions are usually quite specific about means to the end) might permit just sending an email, but reasonable efforts to ascertain receipt of the notice (which is the goal of sending one) might require, say, sending an email with a read receipt, and following up if the receipt isn’t returned within a couple of business days. If that’s what you mean to accomplish, then say it that way rather than leaving a pliable “reasonable” or “best” standard to be administered after the fact and unpredictably by a court.
I suspect that most if not all instances of multiple efforts standards are due to copyandpasteitis.
Maybe this is the time for me to make my case that all “efforts” standards are absurd. No court, faced with a contractual requirement that X do a Thing, will impose a hell-or-high-water standard; it’s always reasonable efforts under the circumstances unless the parties expressly say what happens if the Thing doesn’t occur.
Well, you get into the murky area of what the remedy would be, with different requirements for a breach of warranty claim as opposed to a tort claim. And eliminating efforts would probably cause negotiation freakouts.
Ken, isn’t the difference between what triggers damages? If there is a provisions to take reasonable efforts to make a payment by X date, then a breach and damages are triggered by the failure of reasonable efforts.
If, on the other hand, the party just has the obligation to make a payment by date, then a breach and damages are triggered by the failure to make the payment regardless of what efforts the non-paying party expended (disregarding, because I don’t think they change the analysis, time is of the essence or doctrines of force majeure or impossibility, etc.).
I use efforts (and now only “reasonable efforts”) when I want a party to do something that it really can’t entirely control the outcome of, such as causing a third party to execute a document. If I want the party to be the guarantor of the outcome, I just make it a flat “shall ____.”
Yes, you’re right. The problem comes when, as Vance suggests, you impose a flat obligation even when someone doesn’t have control. As Vance suggests, a court might be inclined to read into that an efforts standard.
If all ‘efforts’ standards are absurd, and courts always impose a ‘reasonable efforts under the circumstances’ standard, then courts always act absurdly?
It might be easier to maintain that all contractual ‘efforts’ standards are pointless because a standard either (1) is not ‘reasonable efforts under the circumstances’, so a court won’t enforce it, or (2) is ‘reasonable efforts under the circumstances’ and so needlessly states what a court will do anyway.
Or maybe the whole idea of ‘what happens if the Thing doesn’t occur’ is better dealt with by creating a positive obligation to do the Thing, and if Acme doesn’t do the Thing, arguing over whether Acme’s failure is or isn’t excused under the terms of a force majeure provision, where the question will be not ‘did you make reasonable efforts to do the Thing?’ but rather ‘Was the force that kept you from doing the Thing really majeure?’
Courts always act absurdly? Well, you could say such a thing, but I couldn’t possibly comment.
I think the best way to say what happens if the Thing doesn’t occur is to say what happens if the Thing doesn’t occur, rather than to rely on a court to do the heavy lifting for you.
I was just laying out your apparent syllogism, not my view:
Major premise: All ‘efforts’ standards are absurd.
Minor premise: Courts faced with ‘efforts’ questions always apply a particular ‘efforts’ standard (the reasonable efforts standard).
Conclusion: Courts faced with ‘efforts’ questions always act absurdly.
Your practical proposal is attractive. It turns an ‘efforts’ question into pure risk allocation — ‘bright line’ stuff rightly beloved of those in the arena.
But that approach abandons the idea behind ‘efforts’ provisions — to make the consequences if the Thing doesn’t happen vary depending on whether the person responsible for making the Thing happen acted reasonably.
This may be one of those situations where the solution to a drafting problem lies in changing the deal to something easier to write up clearly and to enforce, as you suggest.
With our agreements we try to keep our clients from court fights so we prefer to be more specific about the “efforts” standard, opting for “commercially reasonable” and on some occasions going so far as to add some sort of industry standard such as “common in the xyz sector on the Effective Date.” This approach does not necessarily avoid court but it narrows the potential fight while operating also as something of a deterrent. Another approach is to specify efforts in marketing plans and the like (which of course raises its own set of issues, especially if it is a license and an accidental franchise lurks in the shadows).
It also depends upon the action for which efforts are required and their implications. They can be found most often (in my experience) in the tech sector in marketing/sales/distribution/publicity obligations. In some of these instances, it is not really critical, while in others, it is–i.e., pick your battles.
A parallel approach would be to include quarterly/annual minimums, whether of sales, revenues, traffic or whatever metrics are appropriate.
As a matter of course, we try to explain the risks to our clients of qualitative standards. They are always soft targets for legal challenges, not only in the four corners of the agreement but in the commercial relationship itself–meaning that (re)negotiations to structure the relationship might be the optimal (or even best) approach when problems arise with standards measured by commercially reasonable/best efforts.
Finally, like many lawyers we view agreements as relationship frameworks and roadmaps, not just the basis of litigation or dispute resolution.