You have no doubt come across endeavours clauses in contracts, but have you ever stopped to think what this kind of a clause actually means? For example, can ‘best efforts’ require that you act against your own commercial interests in order to stick to the deal you’ve made? And what about when a contract is written in English but governed by Finnish law?
What is a Legal Transplant?
Although international contracts are quite standardly written in English, the law applicable to the contract may often be that of another jurisdiction. In these kinds of contracts, certain phrases and concepts that are commonly used in English are interpreted under the applicable law without necessarily taking into account any established meanings assigned to them under the law of the language they are written in. These kinds of clauses are called legal transplants.
Endeavours clauses are a good example of legal transplants under Finnish law. These clauses generally impose a requirement for a party to use ‘(all) reasonable’ or ‘best’ endeavours or efforts – or some variable of these – to reach an agreed outcome.
In common law jurisdictions, for example, there has been discussion regarding whether ‘all reasonable endeavours’ differ from ‘best endeavours’ and further the extent to which these are more onerous than just ‘reasonable endeavours’.
As English is not an official language in Finland, and Finland is not a common law jurisdiction, there is no established independent meaning for best efforts wordings under Finnish law. There is also no exact equivalent in Finnish legal practice for this concept.
Under Finnish law, best efforts phrases would therefore generally be given their natural meaning. ‘Reasonable efforts’ would require a party to take such measures to achieve the agreed outcome that would be considered reasonable under the circumstances. ‘All reasonable endeavours’ could in turn mean taking all of these measures.
What Are Best Efforts Anyway?
The concept of ‘best efforts’ under Finnish law is trickier, though. In spoken language it sounds like a legendary Finnish sports cliché – yritän parhaani ja katsotaan mihin se riittää (I’ll try my best and see how far that gets me), which is a notoriously meaningless phrase that could easily become a get out of jail free card. Whether the phrase is meaningless if explicitly stipulated in a written agreement can, of course, be another matter entirely.
Indeed, a particular issue of debate in common-law countries has been whether the requirement to use best efforts may in some circumstances require a party to act against its own commercial interests for the benefit of the other party in order to comply with a contract. This is, of course, also a very interesting question when it comes to legal transplants.
Under common law, the issue of commercial interest can be addressed, for example, by drafting the best efforts clause to state that a party shall use its best or (all) reasonable but commercially prudent efforts to reach an agreed outcome. Whilst it is not clear whether this addition is, indeed, absolutely necessary, it clarifies the meaning by eliminating the obscurity in the first place.
Do We Need Endeavours Clauses in Finland?
On the other hand, a valid point to remember is that the principle of good faith under Finnish law requires one to reasonably act in the other party’s interests regardless. This is a notable difference from English law, and, albeit not being a completely overlapping but rather a supplementing principle, one which arguably can make endeavours clauses less meaningful in contracts governed by Finnish law.
Another good point to remember is that the principle of good faith under Finnish law does not generally require a party to go against its own commercial interests for the benefit of another party. Combined with the fact that good faith principles apply to Finnish contracts by default, it might – depending on the context of course – sometimes be better to refrain from confusing general principles altogether and stick to conventional obligations instead. You either undertake something or you don’t – the simpler the better!