Partner Debbie Brett, in our Corporate and Commercial team, discusses a recent commercial court decision which examined the definition of “close of business” in a contract.
What happened?
Under the terms of a contract, ExxonMobil was required to send a particular notice to the Lehman Brothers to a specific fax machine by “close of business” on a particular date. In compliance with the terms, ExxonMobil sent the notice at 5:54pm, which was received at 6:02pm. Lehman Brothers claimed that the notice was late as the close of business was 5pm however; ExxonMobil countered that the close of business was 7:00pm and therefore the notice was validly served.
What was the decision?
The Judge decided that in this particular case (while considering the context of industry), close of business shall be considered to be 7pm because as a commercial bank often operated beyond the hours of 5:00pm therefore a reasonable person would be surprised to hear that a commercial bank closed at 5:00pm.
What are the impacts of the decision?
While this case was decided under very specific context, the judgment does not intend to lay down a general rule that the close of business shall be considered to be 7:00pm.
However the judgment does caution that there should not be an assumption that the close of business will be 5:00pm and could in fact be later (unfortunately the typical 9 - 5 does not exist anymore).
How should you proceed?
When drafting the terms of a commercial contract, be sure to include sufficient details to avoid the risk of any ambiguity as a result of the inclusion of generic phrases. Therefore if performance of a specific action is required by a certain time, that deadline should be clear and unambiguous.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
