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.
This update was published in Legal Alert - February 2017
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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.
- 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  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.