In Lehman Brothers International (Europe) (In Administration) v Exxonmobil Financial Services BV [2016] EWHC 2699 (Comm) (28 October 2016) the High Court determined that the term "close of business" depends on the context.


Lehman Brothers International (Europe) (Lehman Brothers) went into administration on 15 September 2008. At that time there was an outstanding sale and repurchase transaction between Lehman Brothers and Exxonmobil Financial Services BV (Exxonmobil) under which Lehman Brothers had provided Exxonmobil with securities. The transaction was governed by the 2000 version of the standard form Global Master Repurchase Agreement (which is published by the International Capital Market Association) (GMRA).

Among other things, the GMRA provided for a "default valuation notice" to be given by the "default valuation time". The default valuation time was defined as "the close of business in the Appropriate Market on the fifth dealing day after the day on which that Event of Default occurs". Lehman Brothers sent a default variation notice which was received in full by fax by Exxonmobil in London at 6.02pm. Exxonmobil argued that the notice was invalid as "close of business" in these circumstances was 5pm.


The court concluded that the use of the words "close of business" in the GMRA showed an intention to provide a degree of flexibility. The court considered that if a definite cut-off time was to be imposed this would have been expressly specified in the GMRA. The court noted that in this case it made "commercial sense" for a later time to apply as "close of business" for international banks engaging in these sorts of transactions was around 7pm.


The court stressed that its findings on the term "close of business" are limited to this particular case. Nonetheless, this case highlights the importance of clearly specifying any particular notice requirements and timings (such as the time and jurisdiction). Otherwise, it may be the case that standard expressions such as "close of business" import a degree of flexibility.