Daniel A. Batterman also argues for specificity, explaining that it may make sense to give a monetary or temporal value to the effort. In reviewing a case that contains a vague provision on best effort, he notes: “If the parties had agreed on certain measures that should be taken rather than leaving them open, litigation could have been avoided.” ┬á “But I will try really, really hard!”: Use of “best effort” clauses. An effort clause requires a party to make some effort to achieve the desired result. Failure to apply such efforts would constitute a breach of the clause; Failure to achieve the desired result would not be a violation as long as the necessary effort was made. The three most commonly used effort clauses are “best efforts”, “reasonable efforts” and “economically reasonable efforts”. Lawyers and contracting parties generally consider best efforts to be the most demanding of the effort clauses, economically reasonable efforts as the least reasonable efforts, and reasonable efforts as common ground. As discussed below, what lawyers and parties believe is not necessarily what the case law dictates. Many distribution agreements do not contain a provision focused on the distributor`s performance or a provision requiring the distributor to do its “best” (or “reasonable efforts”). Unfortunately, in both cases, there is no objective criterion against which the trader`s performance can be evaluated.
Second, define what is meant by “best, “reasonable” or “commercially reasonable”. This gives the court a definable standard for determining whether the effort required has been made, with less subjectivity, the better in that regard. Efforts could include, for example, sending a notice, covering a certain amount of costs, hiring a specialist with expertise in the given subject, appealing an unfavourable administrative decision, etc., which are, of course, tailored to the applicable outcome. An expense clause may also be defined to indicate what efforts are not required, such as bringing a dispute, incurring excessive costs, taking illegal measures or taking measures that would reasonably expose the party to liability. Finally, some courts compare a best-effort provision to a contractual obligation to perform promptly or prudently. The Courts in New York have taken conflicting positions on the interpretation of expense clauses. Some courts consider “best efforts” and “reasonable efforts” to be equivalent and interchangeable, while others find that there is a distinction between them. One decision interpreted “economically reasonable efforts” as requiring at least a conscious effort to achieve the agreed objective, but a little less than a certain level of effort that jeopardizes a party`s commercial interests. As one federal court noted, New York was “anything but a model of clarity” when it came to interpreting spending clauses.[1] Third, use objective criteria. For example, if a party is required to give notice or take other action under an effort clause, specify the date on which the notice is to be given or the action taken and avoid expressions such as “within a reasonable time”. With respect to “commercially reasonable efforts,” New York courts generally assess a party`s performance in light of an objective standard of reasonableness as opposed to a party`s subjective belief in what the contract requires. Make an effort.
The Parties will do their best to take all necessary measures to ensure that the Merger and other transactions contemplated in this Agreement are effective as soon as possible, including the obligation to make reasonable efforts, commercially reasonable efforts or even best efforts, generally does not mean that the promising party must succeed or take exhaustive measures, to fulfil the obligation. Under New York law, these terms of effort do not require a party to act against its own business interests. Courts in other States have often held that even “best efforts” do not require a party to make every effort, take undue action or suffer significant losses to fulfil an obligation. By agreeing to make every effort to the best of its ability, a party does not agree to take all possible measures, bear unlimited costs or take unlimited time to achieve the desired result. In particular, there are a number of cases where it is found that the most effective and reasonable efforts (the two highest standards, according to most lawyers) impose on the promising party the obligation to act in good faith in light of its own capabilities; give those parties the right to take due account of their own interests; and allow those parties to rely in good faith on their business judgment.
