Drafting Best Efforts, Good Faith, and Fair Dealing Clauses in Commercial Contracts
Avoiding Enforceability and Interpretation Pitfalls With Clear and Measurable Performance Standards
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Commercial Law
- event Date
Thursday, March 5, 2020
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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This CLE course will guide business counsel who seek to draft enforceable best efforts, reasonable efforts, or commercially reasonable efforts clauses in commercial contracts. The webinar will include a discussion of how some courts have applied the implied covenant of good faith and fair dealing when interpreting efforts provisions.
Ms. Conroy's practice is centered on complex business litigation, including products liability, RICO, contract and franchise disputes, as well as the representation of attorneys in ethics proceedings. She advises business owners how to effectively minimize risks and how best to approach and prevail in litigation.
Mr. Gates practice focuses on business litigation, intellectual property and patents. He previously served as chair of the New Hampshire Bar Association’s Intellectual Property Section. He is a published author and presenter on various topics at legal conferences.
Parties to commercial contracts frequently negotiate clauses in the agreements requiring one or both parties to use their "best efforts" to perform their obligations under the contract. In some states, "reasonable efforts" or "commercially reasonable efforts" provisions are instead used to convey the parties' expected performance under a commercial contract.
When disputes over contract performance arise, interpreting efforts clauses often presents challenges for the parties, their counsel, and the courts. Because drafting counsel have often failed to define the actions that constitute "best efforts" clearly, courts have had a difficult time interpreting efforts clauses. In the absence of express language, courts will often rely on the implied covenant of good faith and fair dealing to determine the acceptable standard of performance.
To avoid enforceability pitfalls, expensive litigation, or protracted settlement negotiations, counsel for contracting parties should consider including a clear set of guidelines for measuring the performance of efforts provisions in commercial contracts.
Listen as our experienced panel examines how some courts have ruled in contract disputes centered around best efforts, reasonable efforts, and commercially reasonable efforts clauses. The panel will discuss best practices for drafting precise and predictable efforts provisions in commercial contracts that adequately reflect the parties' expectations.
- Examples of the common usage of best efforts, reasonable best efforts, and commercially reasonable efforts clauses
- Case law guidance
- What is required of parties to satisfy "efforts" expectations?
- How are courts applying the implied covenant of good faith and fair dealing when interpreting efforts provisions?
- Best practices for drafting efforts provisions
The panel will review these and other key issues:
- How are best efforts, reasonable best efforts, and commercially reasonable efforts different?
- What challenges do business counsel face surrounding the drafting and enforcement of efforts clauses?
- How can counsel draft efforts provisions in their agreements that reflect the intent of the parties while not promising too much or expecting too little?
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