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Case law: Ruling shows use of the contractual term 'close of business' can lead to uncertainty

Businesses should either avoid using the term 'close of business' in their contracts or should ensure the contract defines what it means, to avoid unnecessary disputes, following a recent decision.

Legal Alert

This update was published in Legal Alert - February 2017

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A contract specified that notices should be served under it before the 'close of business' on the relevant day. One of the parties served notice on the other at 6.02 pm. The other argued this was after close of business for the day, which a reasonable person would have expected to be at 5.00 pm. The first party argued that a reasonable person would be more likely to expect that businesses like the other one would close business at 7.00pm.

The Court said that it was on the party receiving the notice to establish when it closed for business, but it had failed to do so.

Operative date

  • Now

Recommendation

  • Businesses should either avoid using the term 'close of business' in their contracts or ensure that it is crystal clear what the term means, to avoid unnecessary disputes

Case ref: Lehman Brothers International (Europe) v Exxonmobil Financial Services BV [2016] EWHC 2699

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.