Contracting parties routinely use terms like “commercially reasonable” and “best efforts” to describe future performance, sometimes for strategic reasons, but usually because the demands of the deal do not permit the time needed to negotiate what steps will actually occur, or because the parties cannot agree and prefer to table the issue for another day, hoping it will not become a problem. As clients come to learn, however, adopting such undefined terms often leads to costly, time-consuming disputes.
In this article, we explore why these vague contractual terms are routinely used, explain how they have been inconsistently interpreted by the courts, and offer some practical tips to minimize the havoc ambiguous terms can wreak.
