What is it?
Reasonable efforts is a contractual standard that governs the performance of obligations and remedies for breach. It defines the level of diligence required to satisfy contractual duties without imposing absolute or perfect performance.
reasonable efforts
Contract LawLegal glossary term
Quick answer
Reasonable efforts usually means appropriate, prudent action to fulfill obligations without unnecessary expense. In contracts, it matters because failure can constitute breach. Before signing, define what constitutes reasonable efforts in your specific context.
Definitions
What is reasonable efforts?
Legal Definition
Reasonable efforts represent a standard of conduct requiring parties to take appropriate, prudent actions to fulfill contractual obligations without unnecessary expense or delay. This standard creates an obligation to act diligently and in good faith, but with flexibility based on circumstances and industry norms. The key qualifier is what's reasonable in context, which depends on factors like resources, time constraints, and the specific nature of the obligation.
Plain-English Translation
Like promising to clean your room before going out to play, reasonable efforts means doing what's needed to finish the job properly without taking all day or making unnecessary messes.
Contract relevance
Why reasonable efforts matters in contracts
Failure to meet reasonable efforts can result in breach of contract claims and damages. The party failing to make reasonable efforts bears the risk of liability for resulting losses and may forfeit contractual protections.
Document context
Where reasonable efforts appears in documents
| Document type | Section | Why it matters |
|---|---|---|
| Mergers and Acquisitions Agreement | Due Diligence Section | Ensures target company fulfills pre-closing obligations |
| License Agreement | Term and Termination | Determines licensee's ongoing marketing obligations |
| Construction Contract | Change Order Provisions | Governs contractor's obligations to address unforeseen issues |
| Distribution Agreement | Territory and Performance | Defines distributor's sales promotion requirements |
| Financing Agreement | Covenants | Sets borrower's obligations to obtain financing |
| Employment Contract | Non-Compete | Limits restrictions on former employee's activities |
Contract language
Common contract wording
| Contract wording | Plain-English meaning | What to check |
|---|---|---|
| 'The Licensee shall use reasonable efforts to promote the sale of the Licensed Products' | Means actively marketing and selling, not minimal attempts | Check if examples of acceptable efforts are provided |
| 'The Company shall use reasonable efforts to obtain necessary approvals' | Means pursuing all standard regulatory channels | Verify timeframe for obtaining approvals |
| 'The parties shall use reasonable efforts to resolve disputes amicably' | Means good-faith negotiation before litigation | Define specific steps in the dispute resolution process |
Red flags
Red flags to watch for
Wording examples
Clearer wording examples
Vague wording
'Reasonable efforts'
Clearer wording
'Good faith efforts consistent with industry standards and documented in writing'
Vague wording
'Use reasonable efforts'
Clearer wording
'Take at least [specific number] of commercially reasonable actions from the following list'
Note: “clearer” means easier to read — not legally reviewed or guaranteed safe.
Pre-signature checklist
What to check before signing
1
Define what specific actions constitute reasonable efforts in your industry
2
Include objective standards or metrics to evaluate performance
3
Specify documentation requirements to demonstrate compliance
4
Set clear timelines for when efforts must be made
5
Include consequences for failure to meet reasonable efforts standard
6
Negotiate exclusions or limitations when reasonable efforts is impractical
Party impact
How reasonable efforts affects each party
| Party | What this party should check |
|---|---|
| Licensee | Document marketing activities and sales results to demonstrate compliance |
| Distributor | Maintain records of promotional activities and customer outreach |
| Licensor | Specify concrete examples of reasonable efforts in the agreement |
| Employer | Ensure non-compete restrictions are limited to reasonable efforts scope |
Comparison
reasonable efforts vs similar terms
| Related term | Plain meaning | Main difference from reasonable efforts |
|---|---|---|
| Best efforts | Maximum possible efforts regardless of cost | More stringent than reasonable efforts, requiring extraordinary measures |
| Commercially reasonable efforts | Industry standard actions with cost considerations | Focuses on market norms rather than absolute best efforts |
| Diligent efforts | Careful and persistent attention to detail | Emphasizes thoroughness rather than just appropriate action |
| Good faith | Honest intention and fair dealing | Broader concept than reasonable efforts, which focuses on specific actions |
Missing or vague
If reasonable efforts is missing or vague
Without clear definition, reasonable efforts becomes a source of disputes over whether actions taken were sufficient. Parties may disagree about what constitutes appropriate effort based on different interpretations of reasonableness. Ambiguity can lead to litigation over whether contractual obligations were properly fulfilled. The lack of objective standards makes it difficult to predict how courts would evaluate performance claims. This uncertainty undermines the enforceability of provisions requiring reasonable efforts.
Document map
Document section map
| Contract section | What to inspect |
|---|---|
| Definitions | Include specific examples of reasonable efforts for key obligations |
| Performance Obligations | Detail what reasonable efforts mean for each specific duty |
| Termination | Specify how failure to meet reasonable efforts affects termination rights |
| Remedies | Outline consequences for not meeting reasonable efforts standard |
| Dispute Resolution | Include good faith negotiation as first step before formal proceedings |
Visual model
Understand reasonable efforts fast
An explainer image has not been generated for this term yet.
01
A franchisor must make reasonable efforts to locate a suitable site for a franchisee in the territory specified in the franchise agreement
02
A borrower must make reasonable efforts to obtain financing when required by a financing contingency clause in a real estate purchase agreement
03
A licensee must make reasonable efforts to market a patented product to maintain exclusive distribution rights
Document context
How reasonable efforts shows up in legal documents
Why does it matter?
Failure to meet reasonable efforts can result in breach of contract claims and damages. The party failing to make reasonable efforts bears the risk of liability for resulting losses and may forfeit contractual protections.
When does it matter?
Reasonable efforts becomes relevant when a party faces obstacles in performance or when another party alleges insufficient effort. Courts evaluate whether reasonable efforts were made within the timeframe specified in the contract or when performance issues arise.
Where is it usually seen?
Reasonable efforts appears in supply contracts, merger agreements, licensing deals, and regulatory compliance sections. It's particularly common in commercial contracts where absolute performance is impractical, such as UCC § 2-207 for contract formation and 11 U.S.C. § 362 for automatic stays in bankruptcy.
Who is affected?
Licensees must demonstrate reasonable efforts to maximize sales of licensed products to maintain rights. Distributors must show reasonable efforts to promote and sell products to avoid termination clauses. Both parties risk losing benefits or facing claims if they fail this standard.
How does it work?
First, identify the specific obligation requiring reasonable efforts as defined in the contract. Then, assess whether actions taken were appropriate under the circumstances considering industry standards and practical constraints. Finally, document efforts made to demonstrate compliance with the standard if disputes arise.
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Wikipedia
Reasonable efforts
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Where reasonable efforts connects to real contract work
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Source & disclosure
This page is an AI-assisted plain-English explanation based on LexPredict Legal Dictionary context and contract-review patterns. It is not legal advice. Meaning may vary by jurisdiction, industry, and exact clause wording.
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