Drafting Best Efforts, Good Faith and Fair Dealing Clauses in Commercial Contracts

Avoiding Enforceability and Interpretation Pitfalls With Clear and Measurable Performance Standards

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, April 12, 2017
Recorded event now available


This CLE webinar will provide guidance to 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 courts have applied the implied covenant of good faith and fair dealing when interpreting efforts provisions.

Description

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 clearly define the actions that constitute “best efforts,” 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 performance of efforts provisions in commercial contracts.

Listen as our experienced panel examines how 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 clear and predictable efforts provisions in commercial contracts that adequately reflect the parties’ expectations.

Outline

  1. Examples of common usage of best efforts, reasonable best efforts and commercially reasonable efforts clauses
  2. Case law guidance
    1. What is required of parties to satisfy “efforts” expectations?
    2. How are courts applying the implied covenant of good faith and fair dealing when interpreting efforts provisions?
  3. Best practices for drafting efforts provisions

Benefits

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 clearly reflect the intent of the parties while not promising too much or expecting too little?

Faculty

Kathryn Chapman, Partner
Fitzgerald Franke & Hewes, Chicago

 

Rebekah R. Conroy, Founding Partner
Stone Conroy, Florham Park, N.J.

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.

Zachary R. Gates, Esq.
Gates Law Office, Troy, Pa.

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. 


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Business Contracts and Franchise Advisory Board

Vincent R. Martorana

Assistant General Counsel

KPMG

Charles (C. J.) Schoenwetter

Partner

Bowman and Brooke

Rochelle Spandorf

Partner

Davis Wright Tremaine

Craig Tractenberg

Partner

Fox Rothschild

Les Wharton

Chief Legal Officer

Coverall North America

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