Essential Law Terms for Business Owners: Do You Know the Difference Between Business Hours and Close of Business?

“Business hours” and “close of business” are vague phrases often used in commercial contracts. Both of these phrases are important when it comes time to define them, but many don’t know what either actually refer to in some cases. To help you understand these terms a little better, we’ll help deconstruct them and distinguish them from one another.

Business Hours

In the United States, business hours are usually defined from 8 a.m. to 5 p.m., Monday to Friday. (Sometimes Saturday is considered part of normal business hours as well.) Some may also refer to 9 a.m. to 5, 5:30, or 6 p.m. as normal business hours. As you can see, its definition may vary. But typically, Sundays and legal holidays are never referred to as “business hours.”

But regardless, business hours are never exactly defined and are traditionally dependant on the associated industry, community, and/or context.

To give an example, a landlord can enter a tenant’s property under certain conditions but only during what is considered business hours in order to do so legally. But if both the tenant and landlord have a different idea of what is defined as business hours, the tenant may take the landlord to court in a presumption that they entered their premises at an illegal time.

Close of Business

Like “business hours,” close of business is a very flexible term and will vary depending on business context.

For instance, because most banks would traditionally close at 4 p.m., this time is generally what is defined as close of business for banks, according to a Supreme Court ruling by Re Elektron Holdings Limited (In Receivership), McCann v Halpin. Unfortunately, this ruling failed to determine normal business hours for other industries, still leaving everyone confused.

With the latter said, “close of business” can get tricky. As an example, a landlord may provide a service of notice to a tenant for which they would like them to vacate. However, if it is only stated that they should be gone by “close of business” without properly defining the time they should be vacate, this can cause a misinterpretation for the tenant when they need to leave.

For this reason, it is important for institutions to properly communicate what close of business means on contracts, agreements, and other legal documents to avoid such miscommunications.

The Bottom Line

Business hours and close of business are essentially opposites. Usually, business hours refers to the time a business or industry is able to do something legally (e.g., enter a tenant’s home), and close of business often refers to a due date, for example, that a landlord wishes to receive something from a tenant. But other contexts can also exist for these terms as well.

However, these terms are similar in that they are both commonly used and not entirely defined. These two terms also lead to plenty of confusion and may result in legal issues if there is a dispute present.

Knowing what business hours and close of business refer to in context is important when it comes to formal contracts (e.g., a contract between a landlord and tenant). As a result of proper explanation of what business hours and close of business mean in an agreement, communication between the contract holder and contractee can be clearer.

Conclusion

Legal terms can be difficult to understand. Ambiguous phrases like “business hours” and “close of business” vary depending on what business or industry they reference. Nevertheless, these two phrases are crucial when it comes to contracts. Understanding legal terms can eliminate communication errors, and thus, unnecessary trips to court due to misunderstandings.