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BFV Perspectives, Corporate Matters, Georgia Business Disputes, | Nov 22, 2019

Reasonable Efforts vs. Best Efforts – What’s the Difference?

In business contracts, do you know the difference between reasonable efforts vs. best efforts? Business contracts frequently impose obligations on the parties to accomplish—or at least attempt to accomplish—certain tasks in the future.  For example, a builder may be obligated to use reasonable efforts to obtain a permit.  But what if the agreement obligated that same builder to use its best efforts to get a permit?  Is there a difference?  Should someone obligated to use “best efforts” to accomplish something be held to a higher standard than someone obligated to use “reasonable efforts” to accomplish the same thing?

Federal and state case law on this issue is all over the map, which only adds to the confusion.  No Georgia precedent or court decisions resolves the confusion between “best” and “reasonable” efforts. In his quest for clarity, Kenneth A. Adams, Esq., lawyer, author and contract drafting provocateur squarely addresses this issue in his excellent article, Interpreting & Drafting Efforts Provisions:  From Unreason To Reason, which you can access here.

Reasonable Efforts vs. Best Efforts

Mr. Adams proposes an elegant solution:  ignore the purported distinction and apply a “reasonable” standard to all “efforts” clauses.  Basically, Adams argues that it is unreasonable to require someone to do more than is reasonable in a given situation.  To further simplify matters, reasonable efforts is a well settled standard:  what would a reasonable person in a similar situation do?  Alternatively, best efforts is subjective and may lead to disagreement, both on the streets and in the courtroom.  How do you know when an effort is “best”?  Is merely “better” good enough?  Subjectivity sows confusion, where certainty and consistency is preferred.

Why is this distinction important?  The purpose of writing down the terms of a contract is so that the parties know what is expected of them and so they know what they can expect from other parties.  In the event of a dispute, written agreements also enable judges and juries to understand what the parties agreed to before they became disagreeable.  The ambiguous nature of “best” does not facilitate either of these purposes.  If you expect a party with whom you are contracting to do something that some might consider to go “above and beyond” what is reasonable, or if someone requires such an extra effort from you, consider spelling out precisely what is expected to avoid confusion and confrontation later. 

A good lawyer can help business owners understand, draft and negotiate contractual rights. As always, let me know if I can help.

BFV Perspectives, Corporate Matters, Georgia Business Disputes, | Nov 22, 2019
William J. Piercy
William J. Piercy

Healthy business relationships are an essential component of business success.  When disputes cause business relationships to sour, declining productivity and revenues are sure to follow.  Bill works with business owners to bring successful and efficient resolution to a wide variety.