‘Best Efforts'Bad Drafting

In contract drafting, efforts clauses are ubiquitous but poorly understood. In settlement agreements for distressed transactions, lawyers frequently use “best efforts” or “reasonable efforts” clauses to establish standards of performance for situations where a party must attempt to accomplish something it may not be able to achieve. Lawyers mostly agree that there is a sliding scale of rigor between the different types of efforts clauses. Where they fit on that scale is a different story.

To drive this point home, try this simple experiment: Rank the following phrases from most demanding to least: reasonable efforts, reasonable best efforts, diligent efforts, good faith efforts, best efforts and commercially reasonable efforts. No single efforts clause precisely defines a global standard for performance. Drafters carefully articulate efforts clauses so that standards for performance are legally and semantically justifiable.