Posts Tagged "Contracts"

The “Best Efforts” Contract Clause: Exactly How Much Effort is Best?

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It is quite common to see best efforts clauses in many different kinds of contracts. A party may be required to use its best efforts to market a product in a licensing, distribution or franchise agreement. In a merger agreement, one or both parties may have to use their best efforts to obtain shareholder or regulatory approval. Similarly, buy-sell agreements often require the parties to use their best efforts to conclude the agreement. These clauses are standard terms in all kinds of contracts, but rarely is it defined what constitutes such “best” efforts. Exactly how much effort does a party have to make and how much do they have to spend in order to meet their obligations under such a provision? A recent case in California provided some practical guidance on...

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