What is a "best efforts" clause in a contract?

Prepare for the Texas Contract Law Exam. Study with engaging multiple choice questions, each with explanations. Get ready to excel in your Texas Contract Law Exam!

A "best efforts" clause in a contract signifies a requirement for a party to act diligently and use their utmost ability to fulfill their obligations under the agreement. This type of clause does not demand a specific outcome but rather emphasizes the commitment to exert all reasonable efforts to achieve the objectives outlined in the contract.

For instance, if a party is obligated to complete a project or deliver goods, a best efforts clause would mean that the party must make all reasonable attempts to meet the deadline or quality standards set forth, although it does not bind them to achieve absolute success. This type of clause is particularly useful in situations where the outcome may be contingent upon various factors which are beyond the control of the party, thus protecting both parties by recognizing that they must engage proactively rather than simply go through the motions.

In contrast, complete flexibility, a mandate for performance regardless of circumstances, or guidelines for negotiating rights would not accurately represent the intent and function of a best efforts clause, which is focused on the active engagement and due diligence of the party involved.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy