Best efforts: Overview, definition, and example
What are best efforts?
Best efforts refer to an obligation in a contract where one party commits to taking all reasonable actions to achieve a specified goal or to fulfill a particular duty to the best of their ability. This term does not guarantee the outcome, but it indicates that the party will exert their full and genuine effort, using reasonable means available, to meet the requirements of the agreement. Best efforts clauses are often included in contracts when a party is tasked with delivering a result that may be difficult to guarantee but still requires diligent and committed work.
For example, a supplier may agree to use their best efforts to deliver products to a customer within a certain timeframe, even though circumstances beyond their control could affect the delivery.
Why are best efforts important?
Best efforts are important because they provide a level of commitment to performance without requiring an absolute guarantee of success. This clause is commonly used in contracts to ensure that both parties are actively working toward a specific outcome, even when the result cannot be guaranteed due to factors beyond control, such as market conditions or unforeseen events. It helps ensure that parties do not act negligently or fail to take necessary actions to meet their obligations.
For businesses, a best efforts clause provides a fair balance between commitment and flexibility, allowing them to demonstrate their commitment to fulfilling obligations while acknowledging that certain conditions may be out of their control.
Understanding best efforts through an example
Imagine a technology company entering into an agreement with a distributor to expand the product’s market reach. The distributor agrees to use their best efforts to promote and sell the product in certain regions. While the distributor is committed to making the effort, they cannot guarantee sales or market success due to external factors such as competition or local demand.
In another example, a research firm may agree to use its best efforts to develop a new product or technology within a specific time frame. The firm will allocate resources, hire experts, and use all reasonable methods to achieve the result, but the final outcome may depend on unpredictable factors like scientific breakthroughs or regulatory approval.
An example of a best efforts clause
Here’s how a best efforts clause might look in a contract:
“The Parties agree that each will use their best efforts to achieve the successful delivery of the goods/services outlined in this Agreement. The Parties will take all reasonable actions, including but not limited to engaging necessary resources and providing adequate time, to ensure timely and complete performance. However, neither Party shall be held liable for delays or non-performance caused by factors beyond their reasonable control.”
Conclusion
Best efforts clauses are a useful tool in contracts to ensure that both parties are committed to taking reasonable and diligent actions toward fulfilling their obligations. While they do not guarantee specific results, these clauses foster trust and commitment to performance, providing a framework for handling unforeseen challenges.
For businesses, including a best efforts clause allows flexibility and protection, ensuring that both parties are actively engaged in achieving the intended results, even when external factors may affect the outcome.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.