In the recent case of Lehman Brothers International (Europe) (In administration) v ExxonMobil Financial Services BV, one of the questions the High Court had to decide was when “close of business” had occurred for the purposes of determining whether a written notice had been delivered on time.

The relevant notice was delivered at 18:02. The term “close of business” had not been defined in the parties’ contract. Lehman Brothers said that “close of business” was 17:00; ExxonMobil said it was 19:00.

Lehman Brothers did not adduce any admissible evidence on the point. ExxonMobil’s expert suggested that commercial banks tended to close at about 19:00. Mr Justice Blair accepted this, and found that the notice was delivered on time. In doing so, he referred to the particular business which both parties were operating in this case and to which the notice related, and said that “a reasonable person might be surprised to hear that business closes at 17:00” (para 151).

Whilst Blair J noted that his decision was a finding of fact, limited to this case, it is worth noting from this decision that:

“Close of business” is unlikely to be a fixed time as a matter of English law, and
Its meaning will depend on the context; principally, the relevant market or business in which the parties are operating.

Drafting contractual provisions: flexibility v certainty

Curiously, Blair J said in this case that the term “close of business” provides “a useful flexibility, and should deter arguments based on the precise time of receipt” (para 152). This is a slightly odd statement, given that Blair J was being asked to determine a dispute which had arisen in relation to the term.

Our view, by contrast, is that it is preferable for contracting parties to define concepts such as this, particularly those relating to time. Parties often take the “it will be fine” approach with terms like these. However, as this case demonstrates, you never know when disputes might arise from apparently innocuous contractual terms. Notice provisions in particular will most often be called upon in contentious circumstances, so there needs to be no scope for argument as to how they work.

Therefore, when drafting contractual terms, and particularly notice provisions, which include phrases like “close of business” or “working day” or “business day”, it is advisable to take the extra time to include a definition of the term. That way, there should be no ambiguity as to its meaning, and any possible disputes as to its application in any particular circumstances should be avoided.


This article was written and published on the internet by Simmons & Simmons on 28/11/16.

This article is intended to provide general information about legal topics. Nothing in this article or in the documents available through it, is intended to provide legal advice. You should not rely on any information contained in this article, or in the documents available through it, as if it were legal advice.

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