How To Avoid Using Best Efforts in a Contract - New York Business Law — New York Business Law

How To Avoid Using Best Efforts in a Contract

by Fred Abramson on January 4, 2010 · 0 comments

Many contracts have either no provision directed at performance or have a provision requiring someone to use its best efforts or reasonable efforts. However, there is a big problem because there is no objective way in judging whether someone has performed his best efforts

One way to tackle this problem is by including specific performance levels in the contract.  Here are a few way ideas:

  1. The smallest number of things sold within a certain period of time;
  2. The smallest amount spent within a certain period of time;
  3. The smallest amount of money spent within a certain period of time;
  4. The smallest number of client contacts witin a certain period of time.

From there, you can place a penalty provision for non-performance, examples include:

  1. The ending of the agreement;
  2. If the agreement is an exclusive deal, it can be changed into a non-exclusive;
  3. Loss of discounts.

Conclusion

It is often best to avoid court intervention to decide whether you or the other party used its best efforts to perform as per the terms of the contract.  Be specific in defining the meaning of best efforts.

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