June 19, 2015

More on “Brain-Teaser: ’11:59pm or 12:01am’ for Contracts?”

People love the brain-teasers. I received many emails in response to my blog about a contract that tackles the “what day is it” query. Here are some of those responses:

– Ken Adams has a new blog on the topic entitled “A New Provision Specifying a Drafting Convention Relating to Time

– Whitney Holmes of Dorsey & Whitney notes: Oh dear, the problem of the infinitesimal…. I don’t advocate bringing back the stake, but after 400 years I wish this kind of question would go away.

Midnight doesn’t really exist—it is only in the mind—because there is no indivisible unit of time. Midnight (in the sense of 12:00 o’clock at night) can be infinitely subdivided into seconds, tenths of seconds…nanoseconds, picoseconds and so on. What about 12:00:00.0000001 “midnight”? Still a.m. in my view and not heretical. See, Alexander Amir, Infinitesimal: How a Dangerous Mathematical Theory Shaped the Modern World, Scientific American / Farrar, Straus and Giroux (April 8, 2014). Because every unit can be subdivided into smaller units, any time that starts with a 12:00 has to be the beginning of the next cycle (the next day, in the case of midnight) or you would need an infinite string of zeros, which is impossible because infinity is also a concept that only exists in the mind. Therefore, nothing can happen “at midnight” unless midnight is understood to be 12:00 plus some minute increment of time. As a result, Midnight is 12:00 a.m. the next day. QED

Of course, that results in “12:00 noon” being “p.m.”, or “afternoon,” which is pleasantly paradoxical, not that anybody really cares. Id.

This is reminiscent of the argument that came up at the turn of the century regarding whether 2000 or 2001 was the first year of the new century. Ugh.

– Consecutive days simultaneously begin and end at midnight. It’s similar to the singularity principle with regard to black holes where relativistic equations break down because at the singularity, you reach a theoretical infinitesimal point where an infinite mass exists. The whole “boundary” concept proposed by others makes it seem like time, or more correctly space-time, is not continuous or that you could even discern exactly where the boundary lies. You could never measure the precise moment of midnight, it’s impossible because it’s a singularity. It’s not dissimilar from attempting to measure the length of an island’s coastline – as the size of your ruler decreases and approaches 0, the island’s coastline approaches infinity (there is an interesting book on fractals I read long ago that dives into this idea, which interestingly enough showed up on the LSAT exam I took – I guess that section did not truly test my reading comprehension because I know the answers to the questions based on prior substantive knowledge!).

The response that a day begins a “nanosecond” (10^-9 seconds) after midnight is not correct because that would mean that 1 picosecond (10^-12 seconds)after midnight would still be the prior day, which obviously doesn’t make sense. If you want to get really nerdy, one could analyze the impact of different inertial frames of reference on people’s perception of time under the special theory of relativity.

The practical solution is that if you want something to end at the end of a particular day, use 11:59:59, because it is unlikely that something could happen in the one second between this time and 12:00 that would cause a different result under a contract. For the same reason, I’d also use 12:00:01 for the same reason for something that must begin at the beginning of a certain date. If the one second is problematic for some reason, just carry the specified time out to more significant digits. At some point, we just need to accept an imperfect but practical solution to a problem that is impossible to solve perfectly.

– Pugh v. Duke of Leeds (1777) 2 Cowp. 714 per Lord Mansfield: “’Date’ does not mean the hour or the minute, but the day of delivery and in law there is no fraction of a day.” In Lester v. Garland (1808) 15 Ves. 248 Sir William Grant MR said “Our law rejects fractions of a day more generally than the civil law does. the effect is to render the day a sort of indivisible point.”

Thus a day begins at the instant of midnight passing, and ends at the following midnight. The parties can of course agree to define a day differently, and for banking reasons a day is often defined as ending at 1pm or 2pm (as money transmitted later may not reach the other party until the next day).

In English law, this holds good still – although there are some variations according to custom and circumstance. However, the starting point under US law is, presumably, Lord Mansfield in 1777, with whatever variations were determined by US courts or statutes since 1790 (or thereabouts).”

– There is no such thing as 12 am or pm. It is either 12 noon or 12 midnight.

Boards: Succession Planning for Top Managers

Here’s an excerpt from this Harvard Business Review article entitled “How the Best Board Directors Stay Involved”:

Engaging on talent. Directors have long assumed responsibility for selecting and replacing CEOs, both in the normal course of business and in “hit by a bus” scenarios. Many also find it useful to track succession and promotion—for example, by holding annual reviews of a company’s top 30 to 50 key executives. But to raise the bar, some boards are moving from simply observing talent to actively cultivating it. Case in point: directors who tap their networks to source new hires. Donald Gogel, the chairman and CEO of Clayton, Dubilier & Rice, explains that “our board members can operate like a highly effective search firm. There’s nothing like recruiting an executive who worked for you for a long time, particularly in some functional areas where you know that he or she is both capable and a great fit.” Other boards actively mentor high-performing executives, which allows those executives to draw upon the directors’ experience and enables the board to evaluate in-house successors more fully.

3 Biggest XBRL Mistakes

For those responsible for XBRL filings, this article does a good job of explaining common errors (egs. DEI information; scale errors; auto-generated tags) – and tips on how to avoid them…

Don’t forget to send your nominations for our “Annual Proxy Disclosure Awards.” Here’s how that works. Deadline for nominations is Wednesday, July 1st…

– Broc Romanek