What “best endeavors” means (definition)
– Best endeavors is a contractual promise that requires a party to take all reasonably practicable steps to achieve a specified outcome. It is a high standard of effort—generally above “reasonable endeavors”—and is commonly treated as equivalent to the U.S. term “best efforts.” The duty is to try every reasonable course of action that could realistically lead to the agreed result, but it does not require self-harm (for example, taking actions that would bankrupt the obligor).
How it differs from “reasonable endeavors” (short comparison)
– Reasonable endeavors (also called reasonable efforts) asks the obligated party to take at least one sensible course of action toward the objective. If that single route is tried and fails, the party may have met the obligation.
– Best endeavors demands a more persistent and comprehensive pursuit: trying multiple reasonable routes, repeating attempts where appropriate, and escalating efforts until the objective is achieved or until further action would be unreasonable in commercial terms.
Practical limits on a best-endeavors obligation
– Commercial viability: Courts will weigh whether additional steps were commercially sensible.
– Conflicting duties: A party need not breach other contractual or statutory duties to fulfill best endeavors.
– Financial harm: The obligor is not required to incur losses that would seriously harm its business or solvency.
– Context and conduct: What counts as “best” depends heavily on the facts—what steps were taken, how persistent they were, and the industry standard.
Illustrative scenarios (non-exhaustive)
– Single attempt vs repeated attempts: Leaving one voicemail might satisfy reasonable endeavors; multiple calls, messages, letters, and a courier delivery would support a claim of best endeavors.
– Commercial trade-off: An engineering firm exploring ways to meet a deadline must try cost-neutral or commercially viable options first. If only an option that causes substantial uncompensated expense remains, the firm may be able to show it has used best endeavors without taking that costly route.
Checklist: How to document and meet a “best endeavors” obligation
1. Identify the precise contractual objective and any dates or conditions.
2. List all commercially sensible methods to pursue the objective (phone, email, certified letter, in-person delivery, third‑party intermediaries, regulatory steps).
3. Attempt each reasonable method, prioritizing those with the best expected success/cost balance.
4. If an attempt fails, escalate: repeat contact, broaden channels, involve additional personnel or third parties where appropriate.
5. Keep contemporaneous records: dates, methods used, responses received, costs incurred, and reasons for not pursuing any additional step.
6. Assess and document commercial reasonableness for any step not taken (e.g., excessive cost, conflict with law, or breach of other obligations).
7. Communicate with the counterparty about progress and obstacles, seeking extensions or waivers if appropriate.
Small worked numeric example
Scenario: An engineering firm must try to obtain an essential permit to meet a project deadline. The firm has three feasible options:
– Option A (cost $0): Single standard permit application via online portal—success probability 30%.
– Option B (cost $2,000): Engage a consultant to expedite the application—additional 50% incremental success probability (i.e., combined success 65%).
– Option C (cost $20,000): Fast-track legal petition that would almost guarantee approval—additional 30% incremental success probability (combined 95%), but causes a net loss due to lack of reimbursement.
If
the project would produce $150,000 in profit if the permit is obtained and $0 if it is not. Assume no other costs or penalties besides the options’ fees. Compute expected net value (ENV) for each option:
Step 1 — translate probabilities and payoffs into expected revenue
– Option A: 30% chance × $150,000 = $45,000 expected revenue. Less cost $0 → ENV = $45,000.
– Option B: 65% chance × $150,000 = $97,500 expected revenue. Less cost $2,000 → ENV = $95,500.
– Option C: 95% chance × $150,000 = $142,500 expected revenue. Less cost $20,000 → ENV = $122,500.
Step 2 — incremental analysis (marginal benefit vs marginal cost)
– Moving from A to B: incremental probability = 35 percentage points (0.35). Incremental expected revenue = 0.35 × $150,000 = $52,500. Incremental cost = $2,000 → net incremental benefit = $50,500 (strongly positive).
– Moving from B to C: incremental probability = 30 percentage points (0.30). Incremental expected revenue = 0.30 × $150,000 = $45,000. Incremental cost = $18,000 → net incremental benefit = $27,000 (also positive).
Interpretation (economic view)
– All three options produce positive expected net value relative to the zero-permit baseline, and Option C yields the highest ENV in this simplified model. From a pure expected-value standpoint, spending up to $150,000 × incremental success probability is justifiable because it increases expected payoff.
– This is a numerical decision aid, not a legal ruling. The contractual obligation of “best endeavors” relates to what steps are legally required, not only to expected-value optimization.
Legal/practical caveats about “best endeavors”
– “Best endeavors” is a contractual standard that generally requires a party to take all reasonable steps to achieve the agreed result, but it does not usually require actions that are illegal, impossible, or would impose disproportionate hardship (e.g., ruin the party’s business).
– Courts consider context: the contract language, commercial purpose, bargaining power, and the cost and burden of the steps required. What is “best” in one situation may be unreasonable in another.
– Documenting decision-making (cost estimates, expert opinions, communications) helps demonstrate you took the required steps in good faith.
Checklist: how to apply this analysis when you face a “best endeavors” clause
1. Clarify the objective the clause targets (exact deliverable or outcome).
2. List feasible actions and estimate their: (a) incremental probability of success, (b) direct monetary cost, (c) time required, and (d) legal/operational constraints.
3. Compute expected net value for each action and incremental benefits (as above).
4. Consider non-financial factors: reputational effects, contract waivers, co-obligations, regulatory constraints.
5. Choose a commercially reasonable course and implement it. Prioritize steps that give the largest probability gain per dollar of cost.
6. Keep contemporaneous records: invoices, expert reports, emails, internal approvals, and proof of attempts.
7. Communicate with the counterparty—seek extensions or written acknowledgements if a step is unusually burdensome.
8. If in doubt, obtain legal advice to interpret the clause in
…light of the governing law, the contract as a whole, and the commercial context in which the obligation arose.
9. Escalate and use dispute-avoidance tools. If the counterparty disputes whether you have satisfied a “best” or “reasonable” endeavors obligation, escalate internally to senior management and consider using pre-agreed dispute-resolution steps (notice, negotiation, mediation) before litigation. Early, documented negotiation reduces cost and demonstrates good faith.
10. Prioritize enforceable, measurable actions. Courts and arbitrators look for concrete steps and contemporaneous records. Favor actions that are:
– Observable (third-party invoices, delivery receipts);
– Measurable (time spent, emails exchanged, approvals obtained);
– Reproducible (procedures you can show were followed).
11. Prepare a remediation plan if performance fails. If despite best efforts you fall short, prepare a mitigation and remediation plan that:
– identifies the shortfall precisely;
– lists additional achievable steps and costs;
– offers commercially reasonable compensation or alternatives if appropriate (extensions, partial performance); and
– documents communications offering the plan to the counterparty.
12. Be careful with representations and warranties. Do not accidentally convert a best-endeavors obligation into an absolute promise by making definitive representations (e.g., “we will achieve X”). Stick to factual, documented commitments and use qualifiers (“use commercially reasonable efforts to…”).
Practical checklist (to keep with the project file)
– Clear statement of the targeted outcome (deliverable, milestone, or metric).
– Baseline probability of success and, if possible, why that baseline exists.
– Ranked list of candidate actions with: estimated cost, time, probability uplift, and constraints.
– Expected-value calculation for each action (see formula below).
– Chosen action plan and rationale for why it is “commercially reasonable”.
– Copies of invoices, vendor bids, emails, meeting minutes, approvals, and receipts.
– Copies of notices to the counterparty and any written extensions or acknowledgements.
– Log of internal decisions and legal advice obtained.
Worked numeric example (simple expected-value prioritization)
Assumptions: Contract payoff if outcome achieved = $500,000. Baseline probability P0 = 30% (0.30).
Three candidate actions:
– Action A: cost = $10,000; probability uplift = +15% (0.15); time = 2 weeks.
– Action B: cost = $50,000; probability uplift = +40% (0.40); time = 3 months.
– Action C: cost = $5,000; probability uplift = +5% (0.05); time = 1 week.
Formula: Expected Net Value (ENV) of action = (P0 + uplift − P0) * Payoff − cost = (uplift * Payoff) − cost.
Compute:
– ENV(A) = (0.15 * $500,000) − $10,000 = $75,000 − $10,000 = $65,000.
– ENV(B) = (0.40 * $500,000) − $50,000 = $200,000 − $50,000 = $150,000.
– ENV(C) = (0.05 * $500,000) − $5,000 = $25,000 − $5,000 = $20,000.
Value-per-dollar metric (uplift per $1,000 spent) can help prioritize small budgets:
– A: uplift per $1,000 = 0.15 / 10 = 0.015 uplift per $1k.
– B: uplift per $1,000 = 0.40 / 50 = 0.008 uplift per $1k.
– C: uplift per $1,000 = 0.05 / 5 = 0.01 uplift per $1k.
Interpretation: B yields the largest ENV and should be pursued if time and capital permit. A and C are more cost-efficient per dollar (A is highest uplift per $1k), so if you have limited liquidity or need rapid steps, choose A (and possibly C) first and retain B as a higher-cost, higher-return follow-up. Record all selections and the decision rationale.
Sample clause alternatives and practical drafting tips
– “Best endeavours”/”best efforts”: implies a high level of effort; courts may require extraordinary measures but not actions that are commercially irrational. Use when the obligor is expected to exhaust available, reasonable options.
– “Reasonable endeavours”/”reasonable efforts”: lower threshold; obligor must take reasonable steps a prudent person in their position would take.
– “Commercially reasonable efforts”/”commercially reasonable endeavours”: focuses on efforts consistent with the obligor’s commercial interests;
– “Use reasonable commercial efforts”/”use commercially reasonable efforts”: similar to “commercially reasonable endeavours” but framed as an instruction to “use” those efforts; often used in US agreements. Choose phrasing to match governing law and regional drafting conventions.
Practical drafting and negotiation checklist
– Define the triggering objective. State precisely what outcome the obligor must achieve (e.g., “obtain Competition Authority approval for Transaction X by [date]”). Vague targets invite disputes.
– Choose the effort standard aligned with commercial reality. Use “best” only when you expect the obligor to exhaust available, reasonable avenues even at meaningful cost. Use “reasonable” or “commercially reasonable” when the obligor must balance its own commercial interests.
– Add measurable milestones and reporting. Require periodic updates, budgets, or a schedule of actions to create objective evidence of effort.
– Limit the perimeter of actions. If the obligor must incur costs, define caps, approval thresholds, or carve-outs for actions requiring board consent.
– Specify permitted and prohibited measures. Say whether asset sales, third‑party consents, litigation, or waivers are allowed. If certain actions are off-limits, state them.
– Clarify dispute resolution and remedy. Specify what constitutes a breach and the available remedies (injunction, specific performance, damages, termination rights).
– Address timing and extension. Make it explicit whether time is of the essence, and what happens if regulatory or third‑party delay occurs.
– Cross-reference related covenants. Align confidentiality, indemnities, and exclusivity with the effort obligation so remedies and costs are clear.
– Set governing law and jurisdiction. Courts interpret “best efforts” differently across common-law jurisdictions; pick governing law strategically.
Worked numeric example — choosing between “best” and “reasonable” in practice
Scenario: Seller must use efforts to obtain a regulatory consent needed to close. Three candidate measures can improve chance of approval.
– Measure A: hire specialized local counsel — cost $50k, increases approval probability from 60% to 75% (+15%).
– Measure B: offer a small commercial concession to regulator (modify terms) — cost $200k, increases approval probability from 75% to 92% (+17%).
– Measure C: restructure transactions and divest non-core asset — cost $1,200k, increases approval probability from 92% to 99% (+7%).
If the covenant says “use reasonable endeavours,” a prudent obligor might do A and B (total cost $250k) because those steps are proportionate. If it says “use best endeavours,” a court could expect the obligor also to take C unless it is commercially irrational — but if C destroys the deal economics, the obligor can argue it’s unreasonable commercially. Draft explicitly: if parties want to avoid C, add “excluding divestiture of Material Business Unit X” or “provided that no action is required that would cause Seller to suffer a material adverse effect.”
Sample clause templates (explain intent, then short wording)
– High-effort (close to “best endeavours”):
Intent: obligor must undertake all commercially reasonable steps, including additional expense, to achieve outcome.
Wording: “The Seller shall use its best reasonable efforts to procure [Outcome], including, where necessary and commercially viable, taking such steps as would be taken by a prudent owner seeking to accomplish the same.”
– Balanced
– Balanced
Intent: require the obligor to take commercially sensible, documented steps to achieve the result, but allow it to refuse disproportionate or value‑destroying actions. This sits between an absolute duty and a token effort.
Wording: “The Seller shall use commercially reasonable efforts to procure [Outcome], provided that no action shall be required that would reasonably be expected to cause the Seller to suffer a material adverse effect on its business or to require expenditure in excess of [Cost Cap].”
– Low‑effort (close to “reasonable endeavours”)
Intent: obligor must take reasonable, proportionate steps in light of its existing business priorities and resources; not required to change business strategy or incur material cost.
Wording: “The Seller shall use reasonable efforts to procure [Outcome], acting in good faith and taking such steps as are commercially practicable in the ordinary course of its business.”
Practical drafting toolkit (step‑by‑step)
1. Decide the standard you want (high, balanced, low). Tie the choice to bargaining power, materiality of the outcome, and enforcement risk.
2. List excluded actions. Explicitly carve out steps the obligor will not take (e.g., divestiture, new debt, breach of law).
3. Add quantitative limits. Use a cost cap, percentage of deal value, or a time limit to make “reasonable” measurable.
4. Require escalation and approvals. If costs or risks exceed thresholds, require prior written approval from the other party.
5. Define outcomes vs. efforts. Specify whether the obligation is to achieve a result (obligation of result) or to try (obligation of means).
6. Include reporting and recordkeeping. Require contemporaneous logs, budgets, and milestone reports to support compliance.
7. Add termination or cure mechanics. If the obligor cannot meet the standard, allow notice and a cure period or alternative remedies.
Checklist for negotiators
– Which standard: best / best reasonable / commercially reasonable / reasonable?
– Are there excluded actions? (Yes / No — list them)
– Is there a clear cost cap? (Fixed amount or % of transaction value)
– Is there a time limit or milestones? (Dates, checkpoints)
– Who approves exceptions? (Buyer, board, independent committee)
– What records must be kept? (Emails, budgets, minutes)
– Remedies laid out? (Specific performance, damages, price adjustment)
Worked numeric example (how a cost cap makes “commercially reasonable” concrete)
Assumptions:
– Purchase price: $100 million
– Parties agree that expenditures to secure regulatory approval beyond business‑as‑usual are allowed up to 0.5% of purchase price.
Calculation:
– Cost cap = 0.5% × $100,000,000 = $500,000.
Clause excerpt:
– “Seller may incur costs to obtain [Regulatory Consent] up to an aggregate cap of $500,000 without separate Buyer approval. Any single expenditure in excess of $50,000 requires Buyer’s prior written consent, such consent not to be unreasonably withheld where the expenditure is necessary to achieve [Outcome].”
How to document efforts (evidence that holds up in negotiations or litigation)
– Maintain a time log of personnel hours and tasks.
– Keep vendor bids, invoices, and approval emails.
– Produce board minutes showing decisions and limits.
– Provide periodic milestone reports to the counterparty.
Common negotiation tradeoffs
– Buyer wants a higher standard (to reduce residual risk) — seller resists because higher standards can force divestiture or heavy spending.
– Cost caps help sellers limit exposure; carveouts (e.g., “excluding divestiture”) help preserve business control.
– Buyers can accept lower standards if compensated by price, escrows, indemnities, or walk‑away rights.
Sample short redlines (from most obligating to least)
– “Best efforts”: Seller must take all steps a reasonable, diligent, and determined party would take to accomplish the outcome.
– “Best reasonable efforts” / “best commercially reasonable efforts”: Like best efforts but with explicit allowance to refuse actions that are commercially irrational.
– “Commercially reasonable efforts”: Impose actions that a normal business would take in comparable circumstances
– “Reasonable efforts”: Requires actions a prudent party would take under the circumstances, but does not demand extraordinary sacrifices of time, money, or reputation. Practically, “reasonable efforts” is judged against industry norms and objective reasonableness; it is weaker than “commercially reasonable efforts.”
– “Good faith / reasonable endeavours (UK)”: A catch‑all that requires honest, not obstructive conduct, and usually some active steps, but leaves leeway for a party to refuse unreasonable burdens. In UK law “reasonable endeavours” and “best endeavours” have historically differed; contracting parties should avoid assuming interchangeability.
– “No greater than reasonable efforts / commercially reasonable efforts to the extent practicable”: These hybrid phrases add an objective “practicable” or “to the extent” qualifier. They can be useful when parties want to require effort but to cap exposure where practical constraints (cost, regulatory barriers) make full performance impossible.
Practical ranking (most to least obligating)
– Best efforts (most onerous)
– Best commercially reasonable efforts / best reasonable efforts
– Commercially reasonable efforts
– Reasonable efforts / reasonable endeavours
– Good faith / no specific efforts (least onerous)
Drafting checklist — what to specify to reduce ambiguity
1. Scope: Define the specific outcome (e.g., “obtain Competition Authority approval for Transaction A”) rather than a general obligation to “use efforts.”
2. Standard: Pick one of the defined terms above and, if necessary, provide an inline definition for that deal (avoid relying purely on common‑law meaning).
3. Timeframe: Add fixed dates, milestones, or a rolling deadline for each major step.
4. Budget / cost cap: Limit the dollars/actions the promisor must commit (e.g., “at a cost not to exceed $X without prior consent”).
5. Carveouts: List actions the seller may refuse (e.g., divestiture requiring sale below book value, entering new jurisdictions).
6. Reporting & transparency: Require periodic written status reports, meeting cadence, and access to records.
7. Remedies / consequences: Identify remedies for failure (price adjustment, indemnity, right to terminate, specific performance, liquidated damages).
8. Mitigation: Require the requesting party to mitigate and to cooperate (e.g., buyer must supply requested information).
9. Step‑in / cure periods: Allow a cure period and define “material breach” thresholds.
10. Dispute resolution: Pick arbitration or court, and set governing law (helps interpret ambiguous standards).
Sample redline language (short, tested variants)
– Most obligating (explicit, costly):
“Seller shall use its best