Efforts Provisions in Commercial Contracts: Best Efforts, Reasonable Efforts, and Commercially Reasonable Efforts

by Practical Law Commercial Transactions

This Practice Note discusses the use and interpretation of efforts clauses in commercial contracts, including best efforts, reasonable efforts, and commercially reasonable efforts. Because of the lack of uniformity in the use and interpretation of efforts terms among attorneys, courts, and under the Uniform Commercial Code (UCC), efforts clauses can lead to uncertainty in contract interpretation and performance. This Practice Note examines how courts interpret efforts clauses by considering standards of good faith, reasonableness, and the specific facts and circumstances of the case. It provides practical guidance for drafting clear and enforceable efforts clauses, including defining terms, using objective benchmarks, and adding specific carve-outs intended to help avoid disputes and mitigate litigation risk.