Efforts obligations appear wherever a party must try to achieve something it cannot guarantee — obtaining consents, closing a financing, achieving an earnout target, developing a product.
The problem. Courts in most jurisdictions have not established a clear hierarchy among the formulations. Some treat best efforts as requiring everything short of bankruptcy; others treat all formulations as requiring reasonable diligence in good faith.
What is consistent. Every formulation requires more than passivity, and none requires a party to act against its own fundamental interests unless the contract says so.
The drafting answer. Define the standard in the agreement rather than relying on the adjective. Specify what the obligated party must do — the steps, the resources, the timeline, the reporting — and what it need not do: incur expenditure above a stated amount, agree to unfavourable terms, commence litigation, divest assets, or breach another agreement.
Carve-outs matter most. In merger agreements, whether a party must divest businesses to obtain regulatory clearance is the central efforts question and is addressed by an express provision rather than by adjective.
Evidence. Where an efforts obligation is disputed, the record of what was actually done decides it. A party under such an obligation should document its efforts contemporaneously.