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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Frequently asked questions about best efforts clause
'Best efforts' requires you to exhaust every reasonable avenue to achieve the goal, even at significant cost to yourself. 'Reasonable efforts' is a lower bar — you must try, but you can weigh the effort against the cost and stop when the effort becomes disproportionate. 'Commercially reasonable efforts' falls in the middle: you must act as a prudent businessperson would, considering industry norms and economic realities. Always clarify which standard your contract uses.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.