COVID-19 | ‘Business days’ when business has changed

1 April 2020
Lionel Hogg, Partner, Brisbane
The ‘business day’ in a new light

As at 29 March 2020, the Morrison Government had announced sweeping shutdowns in response to the COVID-19 pandemic.  Pubs and gyms are among those deemed ‘non-essential’ businesses and required to shut down.  Businesses which do not fall under this qualification, including banks, remain open.  Australians are being advised that only two people should gather in public spaces and attend education / work institutions only if they cannot do so remotely.

It is not completely unforeseeable that bank branches will need to close, either as a result of an explicit directive or in response to more sweeping measures, such as the Government later announcing something similar to a ‘total lockdown’, as recently implemented by India.  One legal consideration – among many – which then arises pertains to what a ‘business day’ means, given:

  • it is a boilerplate definition incorporated into most contracts and many statutes imposing time-sensitive obligations, for example breach reporting for financial services licensees;
  • statutory definitions of the term are often drafted by reference to ‘bank holidays’;
  • many contracts feature bespoke definitions of ‘business day’, particularly those with an international dimension; and
  • oft-times those bespoke definitions are with reference to work in the usual course i.e. 8.30am – 5.30pm at an office. They do not contemplate working-from-home scenarios.

Valuation dates, settlement dates, payment dates and many other key actions under contracts, from OTC transactions to large real estate transactions, are calculated by reference to the ‘business day’.  If the sequencing of these days is likely to change given the Government’s measures (and potentially significantly), it will inevitably give rise to postponements of contractual events and ancillary financial ramifications. It is therefore timely to revisit this bedrock definition.

The ‘business day’ according to policymakers past and present

Commonwealth legislation defines what a ‘business day’ means; state legislation varies in this regard, although Queensland’s legislation does define the term.  s. 2B of the Acts Interpretation Act 1901 (Cth) defines a ‘business day’ as a ‘day that is not a Saturday, a Sunday or a public holiday in the place concerned’ and s. 36 of the Acts Interpretation Act 1954 (Qld) defines a ‘business day’ as ‘a day that is not – (a) Saturday or Sunday; or (b) a public holiday, special holiday or bank holiday in the place in which any relevant act is to be or may be done.

The term is also defined in key pieces of corporate legislation.  For example, s. 9 of the Corporations Act 2001 (Cth) defines a ‘business day’ as ‘a day that is not a Saturday, a Sunday or a public holiday or bank holiday in the place concerned.’  Interestingly, the Competition and Consumer Act 2010 (Cth) defines a ‘business day’ as ‘a day that is not a Saturday, a Sunday, or a public holiday in the Australian Capital Territory.’

Various legislation exists specifying what constitutes the ‘public holidays’, ‘bank holidays’ and ‘special holidays’ upon which these definitions are based.  For example, the Holidays Act 1983 (Qld); under that legislation, ‘public holidays’, ‘bank holidays’ and ‘special holidays’ are specified dates (for example, 25 December) or those set by a Government minister.

Commercial parties should keep a watching brief on Commonwealth and state ministerial orders in connection with their contracts which import one or another of the legislative definitions (or do not import any definition).  Such executive orders are not without global precedent; the recent extension of the Chinese Lunar New Year in response to COVID-19 is one such example. Vladimir Putin has also recently declared an entire week as a Russian public holiday.

It will be important to understand the context and force of such executive directions; in most cases they will not amount to a ‘public holiday’ or ‘special holiday’, though each will need to be assessed on their own facts.

The ‘business day’ according to lawyers here and overseas

It is not uncommon for contracting parties with enterprising lawyers to seek to draft their own definitions of ‘business day’ into contracts.  Ideally, those definitions should be fairly straightforward. Sample (anonymised) definitions which we have seen include:

  • ‘Business Day shall be deemed to be each day on which the Bank is open for business’
  • ‘As used herein, the term business day shall mean any day when the Commission’s office in Washington, D.C. is open for business’
  • ‘Business Day means each day that the Trust is open for business as provided in the Trust’s Prospectus’
  • ‘Business Day means any day on which the NYSE is open for trading’
  • ‘Business Day means 8.30a.m – 5.00p.m on any day (other than a Saturday, Sunday or a public holiday) when banks in London are open for business’
  • ‘Business Day means Monday through Friday, except for federal or state holidays’
  • ‘Business Day means any day (other than a Saturday or a Sunday) on which: (a) banks are not authorized or required to close in New York City, New York or Pittsburgh, Pennsylvania, and (b) if this definition of Business Day is utilized in connection with the Euro-Rate, dealings are carried out in the London interbank market’

Definitional interpretation issues are most likely to impact international contracts, given they are unlikely to incorporate Australian statutory definitions. It is straightforward to comprehend the issues that arise with bespoke definitions in the COVID-19 era.  For example, what if all bank branches become closed for business in London?  While many London bank branches are already closing down, does this mean the banks are not ‘open for business’? The New York Stock Exchange shut down its trading floor on 25 March 2020, but remained open for electronic trading – does that mean it is ‘open for trading’ on the above definition?

It is doubtful either of these arguments would succeed in court, but the questions do illustrate an interesting point – there is greater uncertainty around what a ‘business day’ may be interpreted to mean in the context of the global shutdowns and other ructions caused by the COVID-19 pandemic.  That uncertainty could prove costly, depending on the contract.  Potentially, it could see contracting parties engage in litigated disputes, where a court will seek to interpret the definition based on what it determines the parties’ intentions to be at the time of formation.

It is also important to note that ‘business day’ is usually defined by reference to a set geographical setting, for example a specified country.  For this reason, the shutdown measures taken by say the United Kingdom or United States in response to COVID-19 may become highly contractually relevant to commercial parties, notwithstanding that those measures may be very different to the ones being taken in Australia.

The ‘business day’ and hours long and short 

Following from the above, a secondary question arises as to the working-from-home arrangements to which many Australians and global citizens are now becoming accustomed.   Is it a ‘business day’ when many businesses’ physical premises are closed, and employees are working remotely?  The answer to that will depend on how the relevant legislation or contract defines a business day (see the first example of a ‘business day’ clause above for illustration.)

In addition, the hours of a business day can no longer be safely assumed.  One definition of ‘business day’ we have seen is predicated on the ‘working hours period of the business each day’.  Another is referrable to the ‘ordinary hours’ of work each day.  Are those working hours still 8.30am to 5.30pm when employees are working from home?  Can it be argued that a party has missed a notification deadline if they submit a required notice by 8.45pm instead of 5.30pm in the age of working from home? Again, it will depend on a close examination of the definition.

The ‘business day’ and impacts minor and major     

Most contracts predicate the timing of certain actions based on the concept of a ‘business day’, whether defined by legislation or otherwise. Time is often of the essence in many transactions.  Depending on the transaction, if a party’s interpretation of ‘business day’ is such that the action takes place a few actual days after the anticipated event, and time is of the essence, the financial implications could be huge.  Examples include interest accrual on large debts, market fluctuations for OTC transactions, missed option expiration dates, missed notification dates for insurance incidents, extended notice periods, and failures to settle for real estate transactions.  The possibilities are endless.

To ground these scenarios practically, the Attorney General of Texas recently issued an  announcement entitled ‘Update: Calculation of Business Days and COVID-19′ which commenced with these words ‘As part of the unprecedented response to coronavirus in Texas, and in light of the Governor’s recent disaster declaration, our office has received inquiries regarding the calculation of business days…’[1] The issue is a live one for many commercial Texans, just as it will be for many commercial Queenslanders (both states, incidentally, being ‘Sister States’) and other Australians.

It is also not without Australian historical precedent.  In IOC Australia Pty Ltd v Mobil Oil Australia Ltd[2], the High Court decided that a payment which was to be made on the ‘last business day of the month’ was due on 28 December, instead of 31 December. The latter date was only deemed a public holiday after the contract was formed, to the unhappy fortune of the contracting party, who then needed to pay early.

Practical next steps

Businesses who have large value or particularly time sensitive contracts should consider conducting an audit of the definition of ‘business day’ in those contracts to see if they are now likely to be open to arguable interpretation, or may become so in the near future.  It is even more incumbent on those businesses who have entered into international contracts – particularly those drafted by overseas-based lawyers – given the likelihood of bespoke definitions.


[1] Ken Paxton, Attorney General of Texas ‘Update: Calculation of Business Days and COVID-19’, available at

[2] (1975) 11 ALR 417



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Authored by:

Lionel Hogg, Partner

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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