Is there a Common Understanding of Banking Days (or Business Days)?

What difference does it make if someone uses the concept of banking days or business days? There’s no common accepted understanding of the meaning. There used to be, but not now.

Rollback the clock to the ‘70’s and ‘80’s and it was understood that business days and banking days excluded Saturdays, Sundays and Statutory holidays. But, then we had the “Lord’s Day Act” and no ATM’s. Now, you can pretty well do all the banking you need to do on a 24/7 basis with the internet, and enter into legal contracts to boot.

Is the term business day or banking day, commonly understood to mean “closed on weekends and holidays”? Just ask any millennial, and they will look at you inquisitively. Go to nursing homes and they will look at you “knowingly”.

That means the common law is changing, and it always does.

What is the common understanding in 2022?

Well, we can finally get an answer from the Supreme Court of Canada on this question, about 7 years from now in 2029.

And, likely, they will go with the new and improved upgraded understanding, that is “24/7”.

So, let’s figure this out. What difference does it really make?

Sam accepts an Offer to sell his property to Bob at 7:47 pm on Monday. It’s conditional for 5 banking days or 5 business days, based upon inspection and financing.

Bob’s Agent does the math and tells him that he has until the following Monday night at 11:59 pm to firm up, which he does.

Monday                Day 0

Tuesday                Day 1

Wednesday           Day 2

Thursday              Day 3

Friday                   Day 4

Saturday               X, not banking day, not business day

Sunday                 X, not banking day, not business day

Monday                Day 5

Correctly, the Day 5 ran until 11:59 pm as would any day. We are counting days not hours and minutes. The actual “firming up” took place at 6:30 pm by either a Notice of Fulfillment or a Waiver. So, it certainly looks like a firm deal.

However, let’s add some dates to make this a little more interesting. Sam was selling the average house in the GTA and got the price for the average house. Bob’s deal fell through and Sam had to sell his house to another Buyer (Albert) a few months later. Here are the numbers:

$918,170                       April           sale to Bob

$730,907                       August        sale to Albert

$187,263                       Sam’s financial loss on the sale

Just in case you are wondering, these are the real numbers from 2017. The 2022 market looks like it’s shaping up to be much the same.

Bob paid a $50,000 deposit in the April 2017 purchase. His exposure right now is to compensate Sam for his financial loss (by forfeiting the $50,000 deposit and paying another $137,263 from his own pocket).

Now, let’s consider one other matter! The Agreement didn’t say calendar days. It said banking days (or, business days) and neither term were defined in Schedules A or B of the Agreement.

What if the new and improved definition of banking days and business days was in effect in 2017? What might that mean:

                             Day 5 was Saturday

And, if Day 5 was Saturday, then nothing actually happened. No one did anything. Saturday came and went in silence. And, when there was no Notice of Fulfillment or Waiver on Saturday, the Agreement became “null and void” as provided specifically in the Agreement. If it were realized that the deal had gone sour at this point, Sam and Bob would have had to sign a separate new second Agreement. But, they didn’t. Mistakenly, they continued under the illusion that the first deal was still in play. The Documents (NOF and Waiver) related to a transaction that was already “null and void”.

So, what difference does that make?

It simply means that Bob no longer owes Sam $187,263 and he is entitled to his $50,000 deposit back. That’s a $237,263 swing based upon the understanding of the expression.

Now, let’ face it, if you were Bob, would you be prepared to have your lawyer argue this point, or would you simply go along with your agent’s understanding? The sum of $237,263 swings in the balance!

Brian Madigan LL.B., Broker

Leave a Reply

Your email address will not be published. Required fields are marked *