"Famous Last Words"

How Much Effort is Best? (March 2006)

Dear Jim:

All through our development contract the publisher requires us to use our “best efforts” to meet the deadlines and milestones. They know we're really committed to the project. What does “best efforts” mean anyway?

Dear Not:

Lawyers describe certain words as “terms of art.” These “terms of art” are like legal icebergs. Only a small part of their meaning is on the surface.

When such words appear in a contract, they have a legally recognized meaning that may go above and beyond the simple words you see on the page.

In the very first column that I wrote over four years ago, I discussed the meaning of one such term of art.

“Time is of the essence” does NOT mean both sides appreciate the importance of finishing on time.

In that early column, we identified that when “time is of the essence” for the developer, a failure to timely meet a milestone, other deadline, or any obligation, even if the failure is for as short a time as one day, or one hour, may result in the developer being in material breach of the agreement.

The publisher's remedies for material breach are greatly escalated over remedies for simple breach. For a more comprehensive discussion of that issue, see the second release of the IGDA Contract Walk-Through.

“Best efforts” is another example of a term of art.

It does NOT mean that the developer will try really really hard to do the job.

A law school professor described “best efforts” to me in this manner: If you agree to use your best efforts to drive a colleague to the train station in time to catch his train, and your mother were to be crossing the road and in your path, best efforts would require you to run over your mother.

It is an absolute standard that requires performance no matter the cost.

In a game development context, “best efforts” may require performance by the developer, no matter the cost or burden on resources and personnel, and without hope of receiving further compensation.

In the typical development agreement, that gives the publisher the unfettered unilateral right to accept or reject milestones for purely subjective reasons, it is dangerous for any developer to agree to this “best efforts” standard.

Alternatives exist.

“Reasonable efforts” takes into account developer's competing obligations, while requiring that developer's obligation to publisher be addressed promptly and professionally. “Reasonable” is a somewhat ambiguous standard – it is the determination of the so-called fictional “reasonable man or woman” looking impartially at the dispute. If a dispute escalates, the role of the reasonable man or woman is taken by the jury!

“Reasonable commercial efforts” may add an overlay of the financial impact of performance on the developer. With developers running at such razor-slim profit margins, financial considerations deserve to be taken into account.

“Reasonable best efforts” attempts to place some limitations on how far those “best efforts” need to go. The problem with this is that “reasonable” and “best” as adverbs modifying the verb “efforts” send mixed messages. Each has nearly a polar opposite meaning in this context. Use of these opposite standards together appears to introduce an ambiguity into the contract and may not make it the best alternative.

“Best commercial efforts” is similar to “reasonable best efforts” in that it seeks to place limits around how far “best efforts” has to go. In this case, some commercially reasonable standard may be applied in considering the financial impact of performance on the developer. However, since there is a requirement of “best efforts,” it is unclear how much relief such a standard would give.

If the developer and the publisher can not agree on any of these alternative “terms of art,” it may be they can settle on developer “trying really, really hard.” Or some other description of the level of efforts that must be made. By stepping away from a legal “term of art,” the parties may be doing themselves a service in providing that they can look to the actual words in the agreement without the overhanging burden of earlier interpretations. But in the end, if there is a dispute, it is the reasonable men and women on the jury that will decide what the contract required and whether developer met this standard.