Contract Performance
Best Efforts
Also: Best Efforts Standard, Best Efforts Obligation, Best Endeavours · Best Efforts Standard, Best Efforts Obligation, Best Endeavours, Maximum Efforts
"Best efforts" is a performance standard in a contract that requires a party to do everything reasonably within its power to achieve a specified objective.
It is generally considered a demanding standard — though courts have interpreted it differently, and its practical meaning depends on the jurisdiction and the specific obligation.
Lawyer Explanation
"Best efforts" is a contractual performance standard that requires the obligated party to take all reasonable steps within its power to achieve the specified objective. Courts have interpreted the standard differently across jurisdictions.
Some courts treat "best efforts" as requiring a party to do everything possible, even at significant cost. Others treat it as equivalent to "commercially reasonable efforts" — requiring the party to take the steps that a reasonable person in similar circumstances would take.
The ambiguity of the "best efforts" standard is one reason why parties sometimes prefer "commercially reasonable efforts," which is generally understood to require steps that are reasonable in light of the party's own business interests.
What It Actually Does
A best efforts obligation answers: "How hard is this party required to try to achieve this objective?" For example, a licensing agreement may require the licensee to use best efforts to commercialize the licensed technology. This means the licensee must take meaningful, diligent steps toward commercialization — not merely make a token effort.
Why It Matters
The choice of performance standard — best efforts, commercially reasonable efforts, or reasonable efforts — can significantly affect a party's obligations and exposure.
A party subject to a best efforts obligation may be required to take steps that are costly or burdensome, even if they would not be required under a lower standard. For that reason, the standard should be chosen carefully and defined clearly in the contract.
Example
A company licenses its software platform to a distributor under an agreement requiring the distributor to use best efforts to market and sell the platform.
The distributor makes minimal marketing investments and generates few sales. The licensor may argue that the distributor failed to use best efforts — potentially giving rise to a breach of contract claim.
Common Language You May See
"Licensee shall use best efforts to commercialize the Licensed Technology and shall provide quarterly reports to Licensor describing its commercialization activities."
What Stewart Law Looks For
- Does the contract use "best efforts," "commercially reasonable efforts," or another standard?
- Is the standard defined in the contract?
- What specific obligation is subject to the efforts standard?
- Is the standard mutual or does it apply to only one party?
- Are there any benchmarks or metrics that define what satisfies the standard?
- How does the efforts standard interact with other performance obligations?
- What remedies are available if the standard is not met?
Common Red Flags
A best efforts provision deserves closer attention when it:
- uses "best efforts" without defining what the standard requires in the specific context
- applies to a broad range of obligations without specifying what actions are expected
- is used in a context where the parties have very different views of what the standard requires
- fails to include any benchmarks or reporting requirements that would allow the other party to assess compliance
- is combined with a limitation-of-liability clause that may limit remedies for failure to meet the standard
Perspectives
Customer / Buyer
The party relying on the other party's efforts will generally want a clearly defined standard with specific benchmarks, reporting requirements, and meaningful remedies if the standard is not met.
Vendor / Seller
The party subject to the efforts obligation will generally want a clearly defined and reasonable standard, specific benchmarks that define compliance, and protection against claims based on subjective assessments of effort.
Florida & Federal Considerations
Florida
Florida courts have addressed "best efforts" obligations in various commercial contexts. The specific meaning of the standard depends on the contract language, the nature of the obligation, and the facts. Florida courts generally require the obligated party to take meaningful, diligent steps toward the specified objective.
Related Terms
Contracts Where You'll Commonly See It
Frequently Asked Questions
Is "best efforts" a higher standard than "commercially reasonable efforts"?
Courts have reached different conclusions. Some treat "best efforts" as a higher standard requiring a party to do everything possible, while others treat it as equivalent to "commercially reasonable efforts." The distinction depends on the jurisdiction and the specific facts.
What does a party have to do to satisfy a "best efforts" obligation?
The answer depends on the jurisdiction and the context. Courts generally require the obligated party to take all reasonable steps within its power to achieve the objective, but do not require it to take actions that would be commercially unreasonable or financially ruinous.
Is "best efforts" the same as "reasonable efforts"?
Not necessarily. Courts have treated these standards differently in various jurisdictions. "Best efforts" is generally considered a higher standard than "reasonable efforts," though the practical difference may be limited depending on the context.
Can a party be held liable for failing to use best efforts?
Yes. A failure to use best efforts when contractually required may constitute a breach of contract. The non-breaching party may seek damages or other remedies depending on the contract and applicable law.
Should I prefer "best efforts" or "commercially reasonable efforts" in my contracts?
The choice depends on the context and the parties' intentions. "Commercially reasonable efforts" is often preferred in commercial agreements because it provides a more predictable standard. The specific language should be chosen carefully based on what the parties actually intend.
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