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For any small business owner, freelancer, or startup founder, getting the details right in a contract can make the difference between smooth sailing and unnecessary disputes. One of the most deceptively simple terms that appears in nearly every Australian commercial agreement is the “business day”. But what is a business day, exactly, and why does it matter so much in legal documents? If you’ve ever wondered, “what does business days mean in contracts?” or felt unsure about deadlines that specify ‘7 business days’ rather than just ‘7 days’, you’re not alone.
Understanding what a business day is – and isn’t – is essential for clear communication, staying compliant, and protecting your rights in commercial relationships. In this article, we’ll break down exactly what a business day means in Australia, how it’s defined in most contracts, when it matters, and the best ways to avoid confusion or legal pitfalls. If you want to be confident about your business agreements (and avoid costly mistakes), keep reading – we’ll help you navigate this key legal concept step by step.
What Does ‘Business Day’ Mean in Australia?
A ‘business day’ is generally any day when regular business is conducted – but legally, it’s actually a bit more specific. Contracts in Australia often specify what is meant by a business day, as deadlines, deliveries, and even when interest starts or stops accruing can all depend on it.
In simple terms, a “business day” is any day that is not a weekend (Saturday or Sunday) or an official public holiday in the relevant state or territory. So, if you have a deadline of “5 business days” and you start counting from a Wednesday, those 5 days would skip over the weekend, and also any public holidays that fall in the middle. This sounds straightforward, but there are a few important details to watch out for.
Why Does This Definition Matter?
The exact meaning of “business day” can directly affect when important obligations are due – like making a payment, responding to a notice, fulfilling an order, or even cancelling a contract within a cooling-off period. If the term isn’t defined clearly, parties might end up with different understandings and that can lead to costly mistakes or disputes.
That’s why almost every well-drafted Australian contract includes a clause clarifying what counts as a business day, tailored for the context of the agreement.
How Is ‘Business Day’ Usually Defined in Australian Contracts?
While Australian law has general principles, the actual definition of “business day” is usually set out in the contract itself. Here’s the typical form you’ll see:
- Business Day: means a day other than a Saturday, Sunday, or public holiday in the place where the obligation is to be carried out (for example, the state or territory where your business operates or where your client is based).
So, if you’re a Sydney-based business and you sign a contract referencing “business days”, NSW public holidays will count, but not necessarily public holidays in Victoria or Queensland. Some contracts get even more specific, stating that a business day means “a day (other than a Saturday or Sunday) on which banks are open for general banking business in New South Wales” or “in the capital city of the state.”
If you’re working with national clients or across borders, international contracts may define business day differently (sometimes referencing local time zones or even multiple countries’ public holidays). That’s why it’s critical to check the definition in each contract you sign.
Why Does ‘Business Day’ Matter? (And How It Affects Your Business)
It might seem minor, but getting the “business day” calculation wrong can have serious legal and financial consequences, especially around deadlines and compliance. Here’s why it matters so much:
- Deadlines: Timeframes for payments, responding to formal notices, providing documents, or completing key steps are often set in business days (e.g., “within 7 business days after receipt of invoice”). Missing these by a day, due to miscounting, could trigger late fees or breach of contract.
- Notice Periods: Termination of agreements or exercising a right to end a contract often requires written notice within a set number of business days. If you send your notice too late, that right may lapse – or you could be stuck in a contract longer than intended.
- Cooling Off and Consumer Rights: Under the Australian Consumer Law, some rights (like the 10 business day cooling-off period for unsolicited sales) are specifically in business days, protecting both business and consumer.
- Interest and Penalties: Some supplier agreements count interest or calculate late fees in business days. Getting the calculation wrong could cost you money or lead to disputes.
Counting Business Days in Practice: Tips and Traps
Let’s look at how “business days” work in a practical sense, using an example:
Suppose your contract says payment is due “within 5 business days” of receiving an invoice. You receive the invoice on Friday, 1 June. The next 5 business days are:
- Monday, 4 June
- Tuesday, 5 June
- Wednesday, 6 June
- Thursday, 7 June
- Friday, 8 June
Assuming there are no public holidays, your payment would be due by close of business on Friday, 8 June. But, if Monday, 4 June happened to be a public holiday in your state (like WA Day in Western Australia), you would skip that day and the payment would be due on the following Monday instead. Always check the local public holiday calendar!
Tip: If you’re ever in doubt about how to count business days, or if there’s an upcoming holiday, clarify with the other party in writing or seek legal advice. Misunderstandings can be costly.
What If ‘Business Day’ Isn’t Defined in My Contract?
If the contract doesn’t include a definition, courts will usually apply the common meaning: a weekday that isn’t a Saturday, Sunday or official public holiday at the place of business. However, if there’s an ambiguity (such as where the business is located, or which state’s holidays to use), this can open the door to disputes.
To avoid this, always aim to include a clear definition of “business day” in any commercial contract you sign or use. If you’re using contract templates or trying to copy terms and conditions from elsewhere, be sure to check how business days are covered.
What Legal Documents Should Define ‘Business Day’?
Just about any legally binding agreement that involves deadlines should define “business day”. Here are the most common documents where this matters:
- Service Agreements & Supplier Contracts: For delivery timelines, payment periods, and penalties.
- Lease Agreements: For rent due dates, notice periods, and end-of-lease handover.
- Employment Agreements: For start dates, probation periods, and notice of resignation or termination.
- Shareholders & Partnership Agreements: For decision-making timeframes, buy-out options, and dispute resolution processes.
- Franchise Agreements: For obligations under the Franchising Code of Conduct and rights of both parties.
If you’re drafting agreements, reviewing templates, or considering entering into a contract drafted by someone else, make sure to pay special attention to how “business day” is defined. You can get a contract review from legal experts to spot these details before signing.
Best Practices for Managing ‘Business Day’ in Your Contracts
To ensure your contract timelines function as intended – and avoid late penalties, confusion, or disputes – here are some practical steps:
- Always Define ‘Business Day’: Include a “Definitions” section in your contract and set out what counts as a business day and what doesn’t (specify the jurisdiction).
- Be Clear on Time Zones and Locations: If parties are based in different states, clarify which location’s public holidays and business hours apply. For international transactions, specify the country or even city.
- Explicitly State Start and End Times: For critical deadlines, state when the clock starts (“on receipt of notice”) and ends (“by 5pm on the fifth business day”).
- Check and Update for Public Holidays: Review public holiday dates at the start of the year and adjust timelines if needed. Some states have holidays that others don’t!
- Document Any Changes in Writing: If you agree to extend a deadline or waive a requirement, get it in writing (don’t just assume a verbal conversation will hold up).
You can read more in our complete guide to contract law for Australian businesses.
How to Avoid Disputes about Business Days
Disputes about timeframes are surprisingly common in Australian business contracts, especially if there’s uncertainty around what “business day” means. To minimise your risks:
- Use Plain, Consistent Language: Avoid using terms like “calendar days,” “working days,” and “business days” interchangeably. Each may mean something different.
- Refer to the Definitions Section: Always ensure key terms are clearly defined in your contract.
- Educate Your Team: Make sure anyone responsible for contract management or compliance understands how to calculate business day deadlines.
- Don’t Rely on Assumptions: If it’s unclear, ask. It’s better to clarify expectations at the outset than get caught in a dispute later.
Too often, small businesses find themselves blindsided by a missed deadline or penalty that could have been avoided with a little upfront diligence. Our experienced contract lawyers can help you set up clear agreements that stand the test of time.
What Happens If There’s a Disagreement about Business Days?
If a dispute about counting business days does happen, the first step is usually to try to negotiate a solution, referencing the contract terms and any evidence of communication (emails, written notices, etc.).
If the disagreement can’t be resolved directly, you may need to seek legal advice or use dispute resolution options included in your contract – like mediation, or, in rare cases, court proceedings. Clear, upfront definitions and direct communication can prevent most problems before they start.
Alternatives: What If I Want Flexibility Beyond Standard Business Days?
For industries that operate outside of the typical Monday-to-Friday, 9-to-5 window – such as retail, hospitality, or e-commerce businesses – you might choose to define timeframes in terms of “calendar days” instead. This means every day counts, including weekends and holidays. However, this increases the risk of a deadline falling on a day when banks, government offices, or suppliers are closed, making compliance more challenging.
If you need extra flexibility, it’s best to work with an expert to craft a contract that spells out your expectations, obligations, and any exceptions.
Key Takeaways: What Is a Business Day and Why Should You Care?
- In Australia, a ‘business day’ means a weekday when businesses and banks are open – so, not weekends or local/state public holidays.
- Always check and rely on the definition provided in your contract, as it takes precedence.
- Many contract obligations, especially around payment, notices, and cooling-off periods, are expressed in business days – getting the calculation wrong can have legal consequences.
- Clearly defined business day clauses help avoid disputes and confusion, especially for cross-border or interstate business.
- If you’re drafting or reviewing contracts, pay special attention to “business day” definitions, and seek legal guidance if you’re unsure – this can save money and stress in the long run.
- Our team at Sprintlaw is here to make sure your contracts work for you – not against you – with expert advice and practical support when you need it.
If you’d like a consultation or contract review to ensure your business agreements are crystal clear on deadlines and compliance, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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