Good faith efforts: Overview, definition, and example
What are good faith efforts?
Good faith efforts refer to sincere and honest actions taken by a party to fulfill their obligations or meet specific requirements, even if they don’t guarantee a successful outcome. In legal or contractual contexts, good faith efforts mean making reasonable and diligent attempts to complete a task, achieve a goal, or comply with an agreement, without trying to deceive or avoid responsibilities. The term is often used to describe a party’s commitment to acting with integrity and fairness while striving to meet the terms of a contract.
In simpler terms, good faith efforts are when someone tries their best to do something honestly and fairly, even if success is not guaranteed.
Why are good faith efforts important?
Good faith efforts are important because they establish trust and fairness in business and legal relationships. When parties are expected to make good faith efforts, they demonstrate a willingness to cooperate and work toward mutually beneficial outcomes, even if challenges arise. This is especially critical in contracts where performance is expected but certain outcomes may depend on external factors beyond the party’s control. By ensuring good faith efforts, both parties are encouraged to act responsibly and fairly.
For SMB owners, incorporating and understanding good faith efforts in contracts can help ensure transparency, foster positive working relationships, and minimize the risk of disputes.
Understanding good faith efforts through an example
Imagine you’re a small business owner and you have a contract with a supplier to deliver goods within 30 days. The supplier may encounter unexpected delays due to external factors like shipping issues. However, as long as the supplier is making good faith efforts—such as regularly communicating with you about the delay and taking reasonable steps to resolve the issue—they are meeting the contractual requirement, even if the deadline is ultimately missed.
In this example, the supplier's good faith efforts to resolve the situation help maintain trust and fairness, even if they can’t meet the exact timeline.
Example of a good faith efforts clause
Here’s an example of what a good faith efforts clause might look like in a contract:
“The Parties agree to use good faith efforts to complete the project by the agreed-upon deadline. This includes taking all reasonable steps to overcome any obstacles or delays that may arise. If unforeseen circumstances prevent timely completion, the Parties will promptly communicate and work together to develop a mutually acceptable solution.”
Conclusion
Good faith efforts are a fundamental part of any contractual relationship, ensuring that parties act with honesty, diligence, and integrity while trying to meet their obligations. For SMB owners, incorporating good faith efforts in agreements can help prevent disputes, promote transparency, and create a fair environment for all parties involved. While good faith efforts don’t guarantee success, they encourage a responsible approach to fulfilling commitments, ultimately fostering trust and cooperation in business relationships.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.