What the Heck Does “Best Efforts” Mean?

I suspect that the one usage that causes me most aggravation is best efforts. That’s because the way I see it is diametrically opposed to the way many practitioners see it.

I think the problem is that people approach it as an issue to be resolved by case law, whereas I see it first of all as a matter of semantics. What does best efforts mean in general usage? And what are the implications of seeking to have it mean something other than that?

I discuss best efforts in MSCD and have blogged about it a few times (seach for “best efforts” and “best endeavours”), but I realized that I hadn’t adequately explored the semantics. So here goes:

Drafters use a bewildering variety of efforts phrases. An informal survey of contracts filed as “material contracts” on the Securities and Exchange Commission’s EDGAR system suggests that the most prevalent efforts phrases are best efforts, reasonable efforts, commercially reasonable efforts, and reasonable best efforts. Also used are good-faith efforts, diligent efforts, commercially reasonable best efforts, and every effort. The mix-and-match quality of efforts terms can approach the bizarre, as in best good-faith reasonable efforts.

The conventional wisdom among lawyers is that best efforts is the most onerous of the efforts standards—that the promisor is required to do everything in its power to accomplish the stated goal, even if it bankrupts itself in the process—whereas other efforts standards are less onerous.

The rationale underlying this distinction is that in everyday language, best represents a higher standard than reasonable. But as a matter of semantics, that is—at least in the context of the phrase best efforts—a problematic proposition.

In the sentence Despite my best efforts, I wasn’t able to purchase any Superbowl tickets, the word best doesn’t mean that the speaker did everything possible to purchase Superbowl tickets, no matter how onerous, such as taking out a loan to purchase tickets from a broker at an exorbitant price. Instead, it means that the speaker did whatever made sense, taking into account not only the extent of his Superbowl enthusiasm but also his finances. The same applies to use of the word best in the statement I’ll do my best to purchase Superbowl tickets—the speaker isn’t required to do everything possible to purchase Superbowl tickets, just what makes sense, taking into account the circumstances. For contract-drafting purposes, the equivalent of I’ll do my best is Acme shall use best efforts.

Like any writing that seeks to regulate conduct, contracts are scrutinized far more closely than other forms of communication. In a dispute, an aggrieved party will seek to squeeze a desired but not necessarily evident meaning out of a given phrase or, if necessary, its constituent elements. It shouldn’t come as a surprise that litigants have fastened on the dictionary meaning of best—“surpassing all others”—so as to argue, regardless of idiomatic use of the phrase best efforts, that an obligation to use best efforts in fact requires that a party take extraordinary measures. However problematic that meaning, it has proved plausible enough to in effect render best efforts ambiguous.

One result is use in contracts of the phrase reasonable efforts. (Best efforts is used in colloquial English, but reasonable efforts is not—its use is essentially limited to contracts.) Reasonable efforts refers to the efforts that a reasonable person would expend in the circumstances. As a result, reasonable efforts isn’t subject to the additional meaning that has been grafted on to best efforts—one couldn’t reasonably suggest that a party under an obligation to use reasonable efforts must take extraordinary measures.

But whereas some lawyers regard reasonable efforts as a misinterpretation-proof replacement for best efforts, others regard both terms as two points on a spectrum of efforts that a party might be required to expend, ranging from the relatively modest to the extraordinary, the latter being represented by best efforts. This interpretation is facilitated by colloquial use of reasonable to mean “not extreme,” as in She got a reasonable grade on her French test.

But this ostensible contrast between best efforts and reasonable efforts demonstrates that the notion of best efforts as requiring extraordinary measures has shortcomings in addition its being inconsistent with the idiomatic meaning of best efforts. For one thing, if best efforts were to represent a more exacting standard than reasonable efforts, then anyone under an obligation to use best efforts would be at risk of having to act more than reasonably—in other words, unreasonably—in order to meet that obligation. That’s an inherently dubious proposition. Furthermore, one would have no basis for determining at what point a best efforts obligation had been met—how unreasonably would one have to act in order to meet an unreasonableness standard? So the “extraordinary measures” meaning of best efforts represents an unworkable standard.

Once reasonable efforts and best efforts were established in the minds of many drafters as representing points on a spectrum, drafters were at liberty to come up with variations on that theme. They’ve certainly taken advantage of that opportunity.

Of the other efforts standards, perhaps the most prevalent is commercially reasonable efforts. But the word commercially is redundant: determining whether a party’s efforts constituted reasonable efforts would, in the context of a business contract, necessarily take into account that context.

As for diligent efforts, it would seem to convey essentially the same meaning as reasonable efforts, only less clearly.

Good-faith efforts would seem redundant, given that an obligation to use good faith is in as a general matter read into contracts.

Other efforts standards—such as reasonable best efforts and commercially reasonable best efforts—represent concoctions that add nothing to reasonable efforts other than confusion.

[As you might have guessed, I expect that some version of this analysis will appear in MSCD2, along with an expanded discussion of the case law and, of course, drafting recommendations. Any comments?]

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.