What Are Best Endeavors?
Let me explain what best endeavors means in simple terms. It's a phrase you often see in commercial contracts, and it puts an obligation on the specified party to use all the efforts necessary to meet the terms outlined. This is stricter than a reasonable endeavors obligation. In fact, it's the same as best efforts, which is the term preferred in securities markets and most US commercial contracts.
Key Takeaways
Here's what you need to know right away. Best endeavors is a legal term that obligates a party in a contract to take every step in their power to fulfill the agreement's terms. In the United States, best efforts is generally preferred over best endeavors, but they mean the same thing. Remember, best endeavors are limited; the party doesn't have to take actions that would harm themselves.
Understanding Best Endeavors
When courts interpret a best endeavors obligation, they see it as requiring the party to make every reasonable effort to reach the goal. Compare that to reasonable endeavors, where the party might only need to try one approach before calling it impossible. The distinction between best endeavors and reasonable endeavors can get fuzzy, leading to disputes that end up in court. In those cases, judges look at things like how much effort was put in, whether it was commercially viable, and if there were any conflicting obligations.
Best Endeavors vs. All Reasonable Endeavors
There's ongoing debate about what sets best endeavors apart from 'all reasonable endeavors.' Enforcing 'all reasonable endeavors' might mean repeating actions several times. Take this example: if a contract requires contacting a third party by a certain date to confirm a transaction, leaving one message after a failed phone call might count as reasonable endeavors. But making multiple calls and leaving messages could qualify as best endeavors. Going further with letters, emails, texts, and even sending a courier might demonstrate all reasonable endeavors. This area of contract law is tricky, and success in court depends on the specific interpretation and context.
Limits to Best Endeavors
The party responsible for best endeavors has protections. They don't have to take steps that put them in a bad position, like spending money they won't recover. Consider an engineering firm hired for a new office building project, with a contract demanding best endeavors to meet a deadline. If exploring options shows that speeding up would cost the firm extra in hours, fees, and permits without client compensation, they aren't required to do it. As long as they've checked all other cost-neutral options, they've met their best endeavors obligation. According to law firm Morrison Foerster, best endeavors matches best efforts as the highest standard, requiring everything short of bankruptcy to achieve the objective.
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