Is there a distinction in civil law between the concepts of “best efforts” and “reasonable efforts”? Many lawyers have had this discussion when negotiating various commercial agreements. It must be said that there is much less case law on this subject in Quebec than in the other Canadian provinces.
In December 2014, however, in Cemar Electro Inc. v. Grob Textile AG1, the Superior Court confirmed that in Quebec civil law, there is in fact a distinction between these two concepts. This decision of the Superior Court is therefore consistent with the common law decisions on the subject.
The facts of the case relate to an action in damages on the grounds that the defendant company, Grob Textile AG (Grob), had not used its best efforts in promoting the products of Cemar Electro Inc. (Cemar). The parties had entered into an exclusive distribution contract containing the following clause:
4.1 The parties agree that during the term of this Agreement, the DISTRIBUTOR shall:
4.1.1 use its best efforts to advertise and promote the sale of the Products in the Territory and to make regular and sufficient contact with the present and potential customers of the DISTRIBUTOR;
The issue was therefore whether Grob had used its best efforts in performing its obligation to promote the sale of Cemar products.
Having read the various provisions of the contract in issue, the Superior Court held that Grob had indeed agreed to use its best efforts. The judge pointed out that sales could have increased if Grob had made “more” or “better” efforts.
The decision states that if Grob had not wanted to use its best efforts to promote Cemar products, it should simply have terminated the contract in accordance with its provisions.
The Court awarded damages corresponding to the profits lost by Cemar, after estimating the sales that would have resulted had Grob used its “best efforts” as the contract required.
In the decision, the Superior Court specified that an obligation to use “best efforts” is more onerous on the party having undertaken it than the obligation to use “reasonable efforts”.
Accordingly, in negotiations and discussions concerning the drafting of various commercial contracts, we must keep in mind that contracts governed by Quebec law will have to be tailored to the clearly stated needs and expectations of each of the parties. We must be careful to use the concept of “reasonable efforts” or “best efforts” judiciously in situations involving obligations of means. The distinction may be very important, depending on the context.