How Did a Best-efforts Clause Save Microsoft?

David Senra reads Bill Gates on the best-efforts clause that later got Microsoft out of an exclusive license. Microsoft had not transferred the software to MITS. It licensed the software, and MITS had to use its best efforts to sublicense it to other companies. Best efforts meant doing everything in one's power to carry out the contract. The other side's lawyers wanted the words "reasonable efforts" instead. Gates would not agree, and he would not sign unless best efforts stayed in.

Years later that wording was the case. Pertec and MITS were blocking licenses they were obligated to pursue, while other companies wanted the product, and Microsoft nearly ran out of money. Gates wanted a one-year buffer: enough in the bank that the company would survive if nobody paid them for a year. The arbitrator sided with Microsoft, ended the exclusive license with MITS, and confirmed that Microsoft owned its source code. Within weeks, money was coming in from five or six clients.