The Performance Standard Illusion: When “Reasonable Efforts” Isn’t What You Think

Contracts often include vague performance standards like “reasonable efforts,” “best efforts,” or “commercially reasonable efforts.” Clients see these phrases and assume they guarantee strong protection. The reality? Courts interpret them inconsistently, leaving plenty of room for disputes.

What These Standards Are Supposed to Mean

At their core, performance standards are meant to set the bar for how hard a party must try to meet its obligations. For example, a supplier may promise to use “best efforts” to deliver goods on time, or a tenant may agree to use “reasonable efforts” to obtain permits. But the lack of clear definitions often creates more questions than answers.

The Illusion of Certainty

Clients frequently ask me: “What’s the difference between reasonable efforts and best efforts?” The truth: it depends on the case. Some courts treat “best efforts” as requiring something more than “reasonable efforts.” Others treat them as identical. Without clear drafting, these phrases give only the illusion of certainty.

Where the Disputes Arise

• Supply & Delivery: Vendors argue they tried their “best,” while buyers argue more could have been done.
• Permitting & Approvals: Tenants or contractors claim delays weren’t their fault, while landlords or owners claim insufficient effort.
• Financing: Borrowers argue they used “reasonable efforts” to obtain financing even when lenders disagree.

Why Courts Struggle

Courts weigh facts like market conditions, industry practices, and good faith. But because these terms lack objective definitions, outcomes vary widely. What one judge calls “reasonable” another may find lacking. This unpredictability can turn minor disagreements into expensive litigation.

How to Protect Yourself

• Define the Standard: Spell out exactly what actions must be taken (e.g., “contact at least three suppliers within 10 days”).
• Add Timeframes: Tie performance standards to clear deadlines and milestones.
• Allocate Risk: Make clear who bears the burden if external factors prevent performance.
• Use Objective Metrics: Replace vague efforts language with measurable obligations.

Don’t Rely on Illusions

At JDE Law Firm, PLLC, I advise clients every day on contracts that rely on “reasonable efforts” or “best efforts.” If you want clarity—and enforceability—your agreements need more than boilerplate. We draft and litigate performance standards to give your business real protection, not illusions.

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