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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.

Analysis 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.

Application 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.

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