Question 1

What's the difference between 'commercially reasonable' and 'best efforts'?

Accepted Answer

'Best efforts' is a higher standard — it means you must do everything in your power, potentially at significant cost, to fulfill the obligation. 'Commercially reasonable' is more forgiving — it requires a good-faith effort within normal business constraints. If you're the one making the promise, push for 'commercially reasonable.' If you're receiving it, push for 'best efforts.'

Question 2

How do courts decide what's commercially reasonable?

Accepted Answer

They look at industry norms, the specific circumstances, and what a typical business would do in the same situation. There's no fixed formula — it's fact-specific. Courts consider the cost of the effort relative to the deal's value, standard practices in the industry, and whether the party acted in good faith.

Question 3

Can 'commercially reasonable' mean different things in different contracts?

Accepted Answer

Yes. What's commercially reasonable for a $10 million enterprise deal is different from a $5,000 freelance project. Context matters. If this ambiguity worries you, define the term in your contract — spell out what specific actions count as commercially reasonable for your situation.

Question 4

What happens if I don't meet the 'commercially reasonable' standard?

Accepted Answer

The other party could claim you breached the contract. But they'd need to prove that you didn't act as a reasonable business would in the same circumstances — which is a hard thing to prove. Keep records of the steps you took: emails, meeting notes, resource allocation decisions. Documentation is your best defense.

Question 5

Should I use 'commercially reasonable' or 'reasonable' in my contracts?

Accepted Answer

'Commercially reasonable' anchors the standard to business norms, which gives it more predictable meaning. 'Reasonable' alone is broader and potentially more subjective. For business contracts, 'commercially reasonable' is the stronger choice — it gives both parties clearer expectations.

Commercially Reasonable

Definition

In Practice

Common in these contract types

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