Reasonable efforts: what is the standard?

We often get asked what the difference is between “reasonable efforts” and “best efforts“.  Sometimes they are referred to as “reasonable endeavours” or “best endeavours“.  It is often a sticking point in the negotiation of agreements and sometimes causes disputes.  “Best efforts” and “reasonable efforts” are vague and not easy to interpret.  There are also many variants – like “commercially reasonable efforts“.  There is a lot of confusion about the distinction between the meanings of the various “efforts” standards.  “Good faith” is generally required in the performance of every contractual obligation – “best efforts” could represent a greater obligation.  ”Best efforts” could mean:

• spending money disproportionate to the importance of performing the obligation; or
• a greater effort than “reasonable efforts” in terms of doing what is within the party’s power to accomplish the task regardless of the financial obligations this may entail.

Most lawyers believe that “best efforts” is a higher standard than “reasonable efforts” and the most onerous of the “efforts” standards.  But the distinction has not been addressed by the South African courts and in fact in Simon v DCU Holdings (Pty) Ltd and others [2000] JOL 6269 (T) the court said that

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