Best Efforts in Contracts: The Highest Standard

What Does "Best Efforts" Mean?

"Best efforts" is a contractual standard obligating a party to do everything in their power to fulfill an obligation, short of actions that would be commercially unreasonable or self-destructive. It is generally considered the highest efforts standard in contract law.

The Efforts Hierarchy

Contracts use various efforts standards, roughly ranked from most to least demanding:

1. Best efforts — Do everything reasonably possible, potentially including measures that are costly or inconvenient
2. Commercially reasonable efforts — Do what a reasonable business would do under similar circumstances, balancing cost and likelihood of success
3. Reasonable efforts — Take steps that a reasonable person would take, considering the burden relative to the benefit
4. Good faith efforts — Act honestly and fairly, without trying to undermine the objective

What Courts Expect

Courts interpreting "best efforts" generally look at whether the obligated party:

• Actively pursued the objective rather than waiting passively
• Dedicated adequate resources (personnel, money, time)
• Explored alternative approaches when initial efforts failed
• Did not prioritize competing interests over the contracted obligation
• Acted with diligence and persistence comparable to pursuing their own important business objectives

However, courts generally do not require a party to:

• Bankrupt themselves
• Take actions that would violate the law
• Sacrifice their core business interests entirely

What to Watch For

• Undefined obligations. "Best efforts to grow sales" is vague. Consider adding specific milestones or measurable outcomes alongside the efforts standard.
• Best efforts when you mean reasonable. If you are the party bound by the obligation, "best efforts" may require more than you intend. Consider whether "commercially reasonable efforts" better reflects the intended commitment.
• No objective benchmarks. Without metrics, disputes over whether best efforts were actually expended become he-said-she-said arguments.

When to Consult a Lawyer

Consider consulting an attorney when negotiating an efforts standard, especially if significant financial outcomes depend on the other party's performance under that standard. The difference between "best" and "reasonable" efforts can be outcome-determinative.

This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.