Courtesy of tipsters who DMed me on Twitter, I bring you Sutter Hill Management Corporation v. Mpire Capital Corporation, a case before the Supreme Court of British Columbia (here). Here’s the contract provision at issue:
The Purchaser shall use commercially reasonable best efforts to satisfy the condition precedent set out in this Section 2.5 as soon as possible.
Commercially reasonable best efforts? *rolls eyes* That’s asking for trouble.
What does the court have to say? I don’t care, because the court’s starting point is that best efforts is more than reasonable efforts, “leave no stone unturned,” etc.
Of course, at least one Canadian law firm has, with the usual deference, served this up for our edification.
The Canadian legal profession has inherited from the English legal profession a legalistic interpretation of efforts provisions. (This isn’t news; I’ve done blog posts and this 2014 article on the subject.) That’s too bad, because it’s a small crack in the edifice of justice. Of course, informed consumers of contract language can easily stay out of trouble by using only reasonable efforts. Anything else is an illusion.
It would be interesting if a Canadian judge, in a fit of free-thinking, consulted my 2019 law-review article (here) instead of recycling misbegotten caselaw. Why would they do that? Because in a 2020 opinion (see this blog post), the Delaware Chancery Court quoted that article, calling it “The most thorough analytical treatment of efforts clauses” and calling me “The leading commentator on efforts clauses.”
I mentioned that on Twitter recently, and someone replied, “I feel like that should be a huge quote above the fold on your website. There’s no stronger testimonial on the planet.” I agree!
Why should a Canadian court pay attention to the Delaware Chancery Court’s endorsement of my article? Because for understanding efforts provisions, the English spoken in Canada and the English spoken in England are functionally identical to that spoken in the United States (aside from use of efforts versus the English endeavours, which is a difference without significance). If the Delaware Chancery Court and other courts in the US interpret efforts provisions differently than do courts in Canada and England, someone has to be wrong.
It sure isn’t the Delaware Chancery Court. And it sure isn’t me.
I still think your advocacy of the disciplined use of ‘shall’ takes the crown, but your tireless efforts to dismantle any hierarchy of ‘efforts’ clauses deserve cheers. The logic behind your position (essentially, standards that are not reasonable are unreasonable, and parties shouldn’t use general language to require unreasonable conduct) reminds me of the sayings, ‘Nothing is as rare as common sense’ and ‘It is no small gift to see the obvious’. If parties want to take on obligations to do unreasonable things, your advice is that they describe those things specifically, not by quirky ‘efforts’ clauses.
Yes, that pretty much sums it up!