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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.

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

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Jonathan Waters
is the founder of Helix Law. Before qualifying as a Solicitor he worked in industry and in investment banking for over a decade. He was also the Partner in charge of Commercial Litigation, Employment Law and Property Litigation at Stephen Rimmer LLP. Jonathan has wide experience of helping and advising businesses to avoid or to deal with commercial disputes and in particular construction disputes.

This article is written to raise awareness of the issues it discusses and it may not be updated after it is first written, even if the law changes. It is not intended to be legal advice and cannot be relied on as such. Helix Law is not responsible or liable for any action taken or not taken as a result of  this article. If you think the matters set out affect you and you wish to apply them to your particular circumstances then we are happy to give you free initial telephone advice. 

Contact Helix Law on 01273 761 990 or email: [email protected]