Bulletins | June 28, 2017

Open all hours? When do you ‘close for business’?

In Lehman Brothers International (Europe) (In Administration) v Exxonmobil Financial Services BV [2016] EWHC 2699 (Comm) the High Court considered what is meant by the phrase ‘close of business’.

The expression ‘close of business’ is used throughout business and law to mean the end of the working day. But when is that time, exactly? Practically, it can vary between businesses or industries; for some it may mean 4pm, 5.30pm or 6pm, whereas for others it may be a little later, or even 11:59pm.

It is also a phrase that has changed in meaning over time – something that doubtless will continue, in order to accurately reflect changes in technology and working practices. Increasingly people can make themselves contactable instantaneously, 24 hours a day.


Lehman Brothers provided Exxonmobil with securities in various forms. Pursuant to their contract, and following an event of default, Exxonmobil served a notice of default on Lehman Brothers so that it could then convert the securities. Exxonmobil also served a ‘Default Valuation Notice’ (“DVN”) which had to be served by the ‘Default Valuation Time’, defined in the contract as:

“…the close of business in the Appropriate Market on the fifth dealing day after the day on which that Event of Default occurs…” (emphasis added)

Exxonmobil sent the DVN to Lehman Brothers by fax at 5.54pm, received at 6.02pm. The court had to decide what ‘close of business’ actually meant in the circumstances.

Lehman Brothers argued that close of business for commercial banks in London could be considered around 5pm (if not earlier), pointing towards “normal business hours, such as are worked by ordinary businesses and High Street banks, rather than the more all-consuming hours worked by investment bankers, commercial lawyers and the like”.

Exxonmobil disputed this, arguing that financial institutions such as Lehman Brothers close for business later than the end of trading, which in London is approximately 7pm. Exxonmobil also argued that, the DVN was effectively served in respect of the global market close of business time, which formed the ‘Appropriate Market’ under the contract.

In its judgment, the court ruled that the “Appropriate Market” should be assessed on a “security-by-security, not a global” basis. The DVN was served in time for the securities relating to the North American market but not in time for others.


The court accepted that “in the modern world commercial banks close at about 7pm”.  Notwithstanding the fact the DVN arrived after close of normal business hours (as argued by Lehman Brothers), it was received by a responsible member of Lehman Brothers’ team, adding further weight to Exxonmobil’s arguments. Lehman Brothers were unable to provide evidence as to what time ‘close of business’ actually was.

As to the meaning of ‘close of business’, the court stated “the fact that the contract does not state a time, and uses the term “close of business” instead, gives a useful flexibility, and should deter arguments based on the precise time of receipt, which may make little commercial sense”. The dispute was settled in Exxonmobil’s favour.


Avoiding ambiguity in any business context is paramount to ensuring that each party understands what is being agreed to and expected of them, thus minimising the risk of disagreements.

There are a number of instances in a commercial property setting where businesses can promote certainty and avoid pitfalls of using unclear language or common phrases.

Some practical examples of how specifying precise timings in commercial property documentation may impact your business:

Notice provisions in a lease

  • Such provisions often follow section 196 of the Law of Property Act 1925 which stipulate the form of the notice and are used as standard across the industry. However, these provisions do not state a cut-off point on a given working day by which notices must be received in order to be deemed served.
  • Including certain deadlines may be advisable, particularly for landlords who do not work past a certain time, due to their office closing at 5pm, for example.

Deadlines for receiving rent

  • Landlords typically specify the dates on which rent should be paid but the particular time by which the funds need to be transferred into the landlord’s account is often left unspecified. In the age of internet banking and near-instantaneous transfers, this can leave tenants with the luxury of paying rent at any point on a given day.
  • This may not be an attractive position for a landlord, however, as it may need to transfer rent monies received between its accounts, but not have an employee available to do this past a certain time, such as 5pm or 6pm. The landlord could also be restricted by banking cut off times. In this instance, setting an earlier deadline for receiving rent (e.g. 12pm), would be advantageous to the landlord whilst providing clarity to each party.

Cross-jurisdictional working hours

  • Where a business has offices around the globe, time zones becomes an issue, with different offices closing at different times of the day (and at different times across the world).
  • In such circumstances, it may be helpful to specify a deadline for contact with respect to a particular time zone or city (e.g. 8pm GMT / London time).


The Lehman Brothers case serves as a cautionary tale for using common phrases in legally binding documents. Whilst there may be circumstances where flexibility – considered by some as ambiguity – is desirable, careful consideration should be given to the use of such phrases instead of inserting specific times and dates. Businesses and their advisers must be mindful as to whether the consequences that result from using common phrases are right for them or if precise wording and the certainty it brings is preferable.

When do you close for business?