Defining the Legal Meaning of a Business Day

What Is Considered a Business Day in Legal Terms?

Generally, a "business day" is a day on which the normal operations of a business are conducted. Generally, to be considered a business day in the context of the law, the day must not be a Saturday, Sunday, or an official recognised public holiday. A "business day" may therefore refer only to the regular working hours of the business, potentially excluding work carried out in the evenings or on weekends. In some cases, the definition of a "business day" is expanded. In the construction world, for example, the definition of a business day encompasses Saturdays and, if the employment contract states it, Sundays and recognised public holidays . In other cases, the definition encompasses only weekdays. The statutory concept of a "business day" has been discussed and defined by the Courts in some court cases. In the case of Sheriff of Fife v Fife Industrial & Provident Society Ltd. (1988), Lord President Emslie stated that "the term `business days’ is used colloquially to denote normal working days; that is to say, days on which no legal obstacle or other practical impediment to ordinary trade exists". He referred to a "legal impediment" as a bank holiday or a public holiday.

Legal Definition of Business Day by Jurisdiction

The definition of what constitutes a business day can vary from one jurisdiction to another. For instance, in the United States, while many businesses operate a traditional Monday-to-Friday work week, there are those that consider Sunday to be a business day (such as banks) and there are also those (such as the stock market) that recognize Saturday as a business day. The practice of the parties involved therefore becomes a crucial factor in determining the elements of "business day" or "business hours", and if this varies for each transaction, they range from Monday to Sunday. It is useful to spell out the periods of time from each date to another date, as for example, Monday to Monday should only result in 7 days, and not 8 days. In many contracts, there is also a period tied to a "commercially reasonable" standard, which makes such standards less precise than a number of defined days from the date in question. If a transaction with a foreign country or state is involved, then it should be clarified whether a business day is the same, and which of the parties’ respective circumstances, practices and terms will prevail. This holds true not just for the legal aspects, but also in terms of logistics: when making business decisions that involve freight, financing contracts and other factors, understanding the local standard or practice is critical to maintaining fluidity and efficiency of both the goods and the engagement agreement.

Business Day Explained in Contract Law

The most obvious context in which the phrase "business day" will come up in your legal (or financial) life will be in the context of large contracts, with contractual stipulations that must be followed to the letter. Generally, these contracts will make definitions of terms such as "business day" incredibly clear, specifying the exact hours, sometimes even the exact state in which a business must be operating.
For example, if you are working with a contract that stipulates that "business days" refer to "regular business hours in the United States," it may be clear to you that the "business days" in question are Monday to Friday, 9 a.m. to 5 p.m. However, if you have a contract, for whatever reason, that specifies that "regular business hours in the United States" refers to Monday to Sunday, 4 a.m. to midnight… well, you may want to hire a lawyer.
The trick with contractual stipulations such as these comes down to context, for the most part. If your contract is really detailed and you can’t agree on your interpretation with the other party, then you may have a greater problem than just semantics, and you’ll have to hash it out with a third party.
Some businesses choose to define business days more loosely in their contracts, generally equating them to "Monday to Friday." This can still lead to misunderstandings, however; for example, 9 p.m. Friday (or 2 a.m. Saturday) may certainly fall in the Monday-to-Friday period, but it isn’t likely to be a business day.

Effect of Holidays on Business Day in Legal Context

The impact of a holiday on the calculation of business days can have significant implications for the exercise of certain rights or meeting certain obligations, such as under a court order. The statutory framework set out in SEPP 24 and the LPA contains some provisions that affect the timing of the exercise of rights, or the satisfaction of obligations, that commences with a specified event. For instance, section 94 of the Conveyancing Act provides that the cancellation of a contract for the sale of land is void unless the purchaser has obtained a court order within 6 months from the end of the cooling off period. The question becomes: does the change of a public holiday affect that 6 month period? It is important, therefore, to consider the impact of shifting public holidays (such as New Years Day, Christmas Day, Labour Day, Queen’s Birthday, and so on) on the timing of an event. The fact that different States have different laws, can create uncertainty, particularly where different jurisdictions are relevant to the particular transaction . For instance, while New Years Day is a public holiday in all Australian States, it is not clear whether there was a public holiday on 2nd January this year in Queensland which, along with Victoria, celebrates the Labour Day public holiday on the first Monday in January. Similarly, while June 11 is the Queen’s Birthday public holiday held in SA, QLD and VIC, it does not exist in NSW, WA and TAS. In contrast, most States in Australia have a public holiday on the Labour Day in October. This could result in different answers to questions about the validity of actions that depend on whether the event under consideration occurred ‘within X business days’, depending on the jurisdiction. It is critical when entering into a lease or sale contract to which a court order or other legal requirement is required, to clearly specify the timing around the relevant events being considered. Given the availability of discrete public holidays, there are arguments that public holidays should not, in fact, be included as days in determining ‘a business day’ in the context in which the terms are used in SEPP 24.

Rule of Business Days in Financial Transactions

In financial transactions, the definition of a "business day" can have significant implications. For example, is Tuesday a "business day" or only Wednesday through Saturday? Many banks operate in numerous locations. In so doing, the definition becomes important in various jurisdictions, e.g., on a day where the banking operations in one location are suspended due to a holiday, but business operations, including electronic banking operations, continue in another jurisdiction.
When transactions are performed via electronic means, the so-called "bankers’ schedule" also come into play. Some banks may remain open on national holidays with the exception of New Year’s Day, Independence Day, and Thanksgiving Day. Many banks are open early on Wednesday and Saturday but close early on Fridays. If a payment is to be credited or debited on a particular day as opposed to being received on that date, then the parties must specify the specific time the term "business day" will determine the date. Given the multiplicity of interpretations, it is often safer to define the term "business day."

Business Days in Legal Drafting: Best Practices

A common difficulty in drafting contracts is ensuring that the definitions are made clear enough to prevent any argument or dispute over their interpretation. This can be particularly important in relation to the definition of a ‘business day’, which may have an important impact on costs and charges.
There are various different ways to manage a business day provision, each of which has its pros and cons. We set out below five best practice tips for clearly defining ‘business day’, which can help avoid any disputes later down the line.
Make it clear whether you are defining a ‘business day’ as being "the business hours of the relevant party on any day that is not a Saturday, Sunday or public holiday" or a 9am – 5pm period on any day that is not a Saturday, Sunday or public holiday. Every day of the week tends to be a weekday in some country , so make sure to clarify the point of the clause in case there is ever a potential jurisdictional issue.
Make it clear whether you are defining a ‘business day’ as being "the business hours of the relevant party or any relevant office" or a 9am – 5pm period of a relevant office. If a party to a contract has multiple offices, it may be helpful to clarify whether the business day applies to all offices or just a specific office relevant to the matter at hand to help avoid any potential dispute.
Different industries and locations may interpret ‘business day’ differently, which can create confusion. For example, if you are dealing with a different jurisdiction, a country with a different holiday calendar or a specific industry that may shut down at the same time each year, it may be helpful to specifically define the business day to avoid any unnecessary arguments.