If you are aware that, when referring to a date or time, it may be necessary specify the time zone is desirable you will likely do so in the relevant clause itself (e.g. on 31 May 2011 at 11:59 a.m. CET). If you overlook that one party is operating from another time zone, you might be saved by a generic clause addressing the issue. But in this blog post, I will suggest that you better watch out in the first place.
Furthermore, I will address issues related to non-business days, as well as a clause that is often used in financing agreements: the modified following adjusted clause.
Times and time zones. In a multinational context it may be helpful to specify which time zone should be referenced in case the parties failed to identify it.
Except as provided otherwise, a reference to a time of day is a reference to the time in Amsterdam, the Netherlands.
Actions on non-business days. If a contract provision identifies several periods of time within which a certain action needs to be taken, there is a possibility that such action will be required to be taken at a weekend or on a public holiday. The following provision creates an allowance for taking such action on the immediately following business day.
If any date specified in this agreement as a date for taking action falls on a day that is not a Business Day, then that action may be taken on the next Business Day.
Modified following adjusted clause. A similar provision, slightly more advanced, is the ´modified following adjusted´ clause used in loan agreements.
If a payment under this Agreement is due on a day which is not a Business Day, the “modified following adjusted” convention shall be applied such that the due date for that payment shall instead be the next Business Day unless this day falls in the next calendar month, in which case the due date for payment of such sum shall be the immediately preceding Business Day. During any extension of the due date for payment of any principal amount under this Agreement, interest is payable on that principal amount at the rate payable on the original due date.
