Efforts standard (best, reasonable, commercially reasonable efforts)

An efforts clause can apply where a deal depends on an outcome outside one party’s control. A seller may promise to seek a landlord’s consent, or a buyer to pursue financing. Check whether the agreement defines the standard or lists the steps it requires. See third-party consent condition and the question of whether an LOI is binding.

How the Supreme Court has met them

In Southcott Estates v. Toronto Catholic District School Board, the school board was found to have breached its obligation to use its best efforts to obtain a severance that was a condition of the sale; the trial judge pointed, among other failings, to not contacting relevant city staff and delaying the severance application. In Sattva Capital v. Creston Moly, the arbitrator found an implied or express term that Creston would use its best efforts to secure a stock exchange approval, and that it did not. Sattva also says a contract is read as a whole to find the parties’ objective intentions, giving the words their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties when the contract was made.

Honesty and Quebec

Under Bhasin v. Hrynew, a duty of honest performance applies to all contracts. These are common-law rules. In Quebec the Civil Code requires good faith (arts. 6, 7 and 1375). Ask what the document says the party must do, such as pay fees or take specific steps.