The phrase ‘close of business’ is commonly used by people in professional settings as a designation of time. It is not uncommon to hear somebody request that a task is completed by close of business.
But what exactly does ‘close of business’ mean?
Although it is generally understood to mean the end of a business day, it does not actually designate a specific time. When we consider that different businesses have different operating hours, the phrase becomes even more confused. Parties who rely upon this phrase may subsequently run into trouble if they haven’t agreed an exact time for ‘close of business’.
The dispute concerned notices served by Exxonmobil pursuant to a repurchase agreement they had with Lehman Brothers International (Europe) (“Lehman”). The agreement provided that for a notice to be received on a day, it should be served and received before the ‘close of business’. There was no further definition in the agreement as to what time ‘close of business’ actually meant.
Exxonmobil served a notice on Lehman’s London offices at 6:02pm. Lehman subsequently argued that the notice should considered as being received the following day, rather than on the day it was actually served. Lehman argued that this is because a reasonable person would consider the end of a business day in London to be 5:00pm. Exxonmobil disputed this and argued that, considering the nature of Lehman’s business (an international investment bank), ‘close of business’ should actually be interpreted as meaning 7:00pm.
Giving judgment, Mr Justice Blair sided with Exxonmobil. Justice Blair looked at the nature of Lehman’s business and decided that as it was a commercial bank, it often operated well beyond the hours of 5:00 pm and a reasonable person might be surprised to hear that their business closed at 5:00 pm.
As Lehman had brought the challenge, the onus was ultimately upon them to prove that the business closes at 5:00pm. The Judge held that in the context of commercial banking, Lehman brothers had failed to do so, and therefore found for Exxonmobil.
Does this mean that Close of Business is 7.00pm?
Because the Judge placed so much emphasis upon the actual nature of Lehman Brothers’ business, the usefulness of the decision as a definition of the term ‘close of business’ is probably limited to commercial banking entities. There is nothing to suggest that a reasonable person would not consider that a small business closes earlier. Therefore a high street shop could be reasonably said to close at 5.00 pm.
Nonetheless, the decision is generally useful in confirming that when considering the definition of such a phrase as ‘close of business’, the Courts will always look at the personal circumstances of the parties rather than attempting to impose a ‘one size fits all’ approach. It should also emphasise to the reader the danger of using disputed, undefined phrases such as ‘close of business’ as a definition inside a contract. When the parties wish to install a deadline into a contract, they should always specifically spell out the actual time of the deadline.