{"id":901199,"date":"2023-05-23T17:12:36","date_gmt":"2023-05-23T23:12:36","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901199"},"modified":"2023-05-23T17:12:40","modified_gmt":"2023-05-23T23:12:40","slug":"construction-contract-efforts-expected-of-contractor","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-efforts-expected-of-contractor\/","title":{"rendered":"Efforts Expected of a Contractor When Efforts Clauses Are in Dispute"},"content":{"rendered":"\n<p>Tamara L. Boeck | <a href=\"https:\/\/www.stoel.com\/legal-insights\/article\/efforts-expected-of-a-contractor-when-efforts-clau\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Stoel Rives<\/a><\/p>\n\n\n\n<p>You will often see in <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-dispute-resolution-clause\/\" target=\"_blank\" rel=\"noreferrer noopener\">construction contracts<\/a> terms directing the contractor to use \u201cbest efforts\u201d or \u201creasonable efforts\u201d or \u201ccommercially reasonable efforts,\u201d but what do they mean?<\/p>\n\n\n\n<p>Take as an example a project that is past the preliminary hurdles. The project is progressing in good faith, although not perfectly, on the critical path. Everyone wants to \u201cmake it work.\u201d But as often happens, not everything in the supply chain and schedule works as the best laid plans outlined, let alone perfectly. In fact, the project is delayed. Where the cause of the delay is not force majeure, or other excusable delay by the contractor, and where the contractor has some fault, what types of actions must the contractor take to satisfy the \u2018efforts clause\u2019 under the contract?<\/p>\n\n\n\n<p>First, it depends which jurisdiction governs the contract. Some courts do not distinguish between \u201cbest efforts\u201d or \u201creasonable efforts\u201d or even \u201ccommercially reasonable efforts,\u201d while other jurisdictions do make distinctions. Therefore, evaluate the case law in the jurisdiction in which you are trying to enforce your terms.<\/p>\n\n\n\n<p>Second, is your jurisdiction one that has concluded that \u201cbest efforts\u201d language alone does not create a fiduciary relationship between the parties, or does it view that language as approaching or reaching a heightened obligation of performance by the contractor? And in what context will the court evaluate the contractor\u2019s obligations?<\/p>\n\n\n\n<p>For instance, courts will often evaluate a variety of factors, such as whether the contractor is a specialist, whether it\u2019s financially strong enough to \u201cdo more\u201d than another or even average contractor, whether it holds a particular expertise in the locale or subject matter, the material costs associated with expected performance versus the original benefit of the contract, whether additional performance is available in a reasonable time frame and cost, whether there are any \u201cindustry\u201d or locale expectations or practices, whether the issue has arisen for this contractor in the past such that an expectation of performance is warranted, and whether any discussions of the subject performance or other negotiations by the parties occurred prior to the contract execution.<\/p>\n\n\n\n<p>Many courts will very specifically evaluate the circumstances of the project and the parties\u2019 positions, and not constrain interpretation to the express terms of the contract. Know if your jurisdiction views its analysis more broadly or will hold the parties to the corners of the contract in a more limited manner. Of course, as with any contract, even the \u201cbest efforts\u201d or \u201creasonable efforts\u201d or \u201ccommercially reasonable efforts\u201d clause must be reconciled with other clauses in the contract, to the extent possible for a reasonable reading of the terms.<\/p>\n\n\n\n<p>Third, courts have acknowledged that these clauses do not mean that the contractor must use every conceivable effort to perform, and most courts do not determine that a contractor must ignore its own interests or perform itself into bankruptcy just to satisfy its contractual terms. Contractors should be aware that diligence is absolutely required, but it is typically evaluated within the parameters of reasonable conduct for that contractor, for the project it agreed to perform. Or in the case of \u201ccommercially reasonable efforts,\u201d a more objective standard may be used to evaluate the contractor\u2019s performance.<\/p>\n\n\n\n<p>Finally, most courts will also evaluate whether the contractor performed its own evaluation in \u201cgood faith\u201d to meet the efforts clause requirements. Was the contractor objectively evaluating its performance and not taking any action that would undermine the owner\u2019s benefit of the bargain? Though the contractor is not a fiduciary, it must do more than just promise to act in good faith; it usually must take demonstrative action to fulfill the contractual duties. The bottom line: Any dispute arising out of such efforts clauses is a question of fact for the arbitrator\/judge or jury. If your contract includes any efforts clauses, consider including in the contract reasonable benchmarks to define the efforts each party is expecting of the other.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tamara L. Boeck | Stoel Rives You will often see in construction contracts terms directing the contractor to use \u201cbest efforts\u201d or \u201creasonable efforts\u201d or \u201ccommercially reasonable efforts,\u201d but what do they mean? Take as an example a project that is past the preliminary hurdles. The project is progressing in good faith, although not perfectly,&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-efforts-expected-of-contractor\/\">Continue reading <span class=\"screen-reader-text\">Efforts Expected of a Contractor When Efforts Clauses Are in Dispute<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224],"class_list":["post-901199","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Efforts Expected of a Contractor When Efforts Clauses Are in Dispute - Advise &amp; 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