Define the time clearly!

In the English case Lehman Brothers International (Europe) v Exxonmobil Financial Services BV [2016] EWHC 2699 (Comm), the High Court considered the meaning of “close of business” for a commercial bank in London. In a decision which demonstrates that where certainty is desired in commercial contracts, parties should specify a definite deadline and avoid ambiguous phrases such as ‘close of business’, the Court held that 7pm could be “close of business”. 

Rejecting the "reasonable person" submission, the judge placed the burden on the receiving party to establish when the close of business occurred, as they were also the party alleging that the notice arrived too late. As the receiving party failed to put forward any admissible evidence demonstrating that the relevant time was 5:00pm, the court ultimately accepted the sender's arguments that the notice was received before close of business on the relevant date.

The receiving party further argued that 'commercial banks' referred to ordinary businesses and High Street banks, which had earlier closing hours of 5:00pm. The judge did not accept this, finding that the expression 'commercial banks' did not have a particular meaning in English law. The judge saw no reason not to accept evidence that modern commercial banks closed at around 7:00pm, though he stressed that this was based on the particular facts of the case. 

The judge noted that, by not expressly stating a definite cut-off time, the use of the term 'close of business' could provide useful flexibility, depending on the context in which it is used.

This case demonstrates that where certainty is desired in commercial contracts, parties should specify a definite deadline and avoid ambiguous phrases such as 'close of business'.

 

Authored by Stephen Foster and Margaret Kemp

Contacts
Stephen Foster
Partner
London
Margaret Kemp
Counsel Knowledge Lawyer
London

 

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