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mardi 16 décembre 2014

Obligation of Means: Reasonable Efforts vs. Best Efforts

By Sarah D. Pinsonnault

Under Quebec Civil Law, a debtor of an obligation of means will be found to have performed its obligation if it proves that it acted prudently and diligently and used all reasonable means to strive to achieve the contractually agreed upon result, regardless of whether or not the latter is actually obtained. In Cemar Electro inc. c. Grob Textile, a.g., 2014 QCCS 5814, the Defendant was held to an obligation of means, whereby it had to use its “best efforts” to advertise and promote the sale of the Plaintiff’s products. With time, the Plaintiff however found that the Defendant did not meet the standard that was expected of it pursuant to the exclusive distribution contract entered into between the parties. Consequently, the Plaintiff sued the Defendant for alleged lost revenues on anticipated sales and loss of the market value of its product. In order to determine whether the Defendant fulfilled its contractual obligations, the Court had to first determine the meaning of the term “best efforts”.

Firstly, it is important to note that Quebec Civil Law, unlike Common Law, does not provide for different standards of “effort” in connection with an obligation of means. In fact, Common Law judges have often used the “leave no stone unturned” analogy to exemplify the intensity of a “best efforts” obligation. 

Quebec courts have nevertheless addressed this question in the past, which fortunately provided guidance on the interpretation and application of the notion of “best efforts” in the case at bar:

“[42] The obligation of « means » entails [… using] reasonable or best efforts to achieve the goal sought by both participants to a contract. Quebec law does not make a difference, as is done under Common Law, between « reasonable » and « best » efforts, although some decisions by judges here have ventured to consider the latter to be more onerous on the party having promised those best efforts to achieve the desired result than normally would be the case.” (references omitted)
With this in mind, the Court found that the Defendant “promised to do more than take reasonable means” to sell the Plaintiff’s products. A detailed review of the evidence persuaded the Court to conclude that the efforts employed by the Defendant “were not the best [it] could and should have done and that [the sales] rapidly fell below what was expected”. On this issue, the Court then went on to state the following:

“[63] In fact, the evidence at trial shows, and at best, tepid efforts on the part of Grob, to actively promote the sales of loom lasers after the first show and demonstration at the 2003 I.T.M.A. fair in Birmingham, U.K.  Except for a page on the back part of their annual catalog/sales manual after 2004 (D-4, D-5), there seems to have been little done to demonstrate or promote the Cemar lasers where they should or could have been shown in action to clients other than those already equipped with them.”
The burden of proof nevertheless fell on the Plaintiff to prove that the Defendant was in breach of contract for having failed to make the appropriate efforts in its execution. The Court found that the Plaintiff only succeeded in proving this in part due to the fact that, while the number of sales had dropped and been stagnant for quite some time, it waiting five years before taking action. As a result, the percentage of responsibility between the two parties was divided as follows:

“[84] The court concludes that both parties are  responsible for the lack of acceptable sales of the product : Grob for not actively giving it's [sic] « best efforts » to promote and sell the product, and Cemar for standing by and not complaining or reacting in any measurable fashion, although it's responsibility is much less than that of Grob. For these purposes, the court attributes responsibility for damages 75 % to Grob and 25 % to Cemar.”
The Plaintiff’s action was therefore granted, but only in part.


To read this decision in its entirety and other elements discussed therein, click here.

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