Contract Glossary
Best Efforts Clause
Definition
A contractual obligation requiring a party to try as hard as they reasonably can to achieve a specific outcome, without guaranteeing the result. 'Best efforts' is the highest standard of effort in contract law, meaning you must pursue every reasonable avenue, even at significant cost. It sits above 'reasonable efforts' and 'commercially reasonable efforts' in the effort hierarchy.
In Practice
A software company licenses technology from a patent holder and agrees to use 'best efforts' to commercialize it within 18 months. Under this standard, the licensee must actively invest resources, hire staff, pursue sales channels, and explore market opportunities, not just make a token attempt. If the licensee does nothing for 12 months and then claims the market wasn't ready, they've likely breached the best efforts clause. Courts will look at whether the licensee took every reasonable step, even if the product ultimately failed commercially.
Example Clause
Licensee shall use its best efforts to develop, market, and commercialize the Licensed Product within the Territory during the Term. 'Best efforts' shall mean the efforts that a reasonably prudent person in Licensee's position would use to achieve the objective, including the dedication of adequate resources, personnel, and capital.
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