When “indefinite” doesn’t mean “forever”: The court of appeal clarifies common‑law termination rights

The recent Court of Appeal decision in Zaha Hadid Ltd v The Zaha Hadid Foundation is an important development for anyone drafting or relying on long‑term commercial agreements. It delivers much‑needed clarity on when the courts will recognise a common‑law right to terminate on reasonable notice, especially in contracts expressed to continue “indefinitely”.

In 2013, Dame Zaha Hadid, the globally recognised architect, entered into a trade mark licence with her architectural firm, Zaha Hadid Limited (the "Company"), allowing the Company to use the registered trade marks for 'ZAHA HADID'. At the time, Dame Zaha was the sole shareholder of the Company. In 2016, upon Dame Zaha's death, the registered trade marks passed to the Zaha Hadid Foundation (the "Foundation"). The Company wished to renegotiate the licence fee (which it considered to be too high), and the dispute arose over whether the Company was entitled to terminate the licence on reasonable notice.

At the heart of the dispute was clause 12.1 of the licence, which stated that the agreement would “continue indefinitely, unless terminated earlier” in accordance with the specific termination rights given to the Foundation (but not the Company) under the licence. The High Court read this as creating a relationship that the Company could never terminate – a construction the Court of Appeal emphatically rejected.

1. Indefinite ≠ Perpetual

A central and pivotal element of the judgment was its clear distinction between “indefinite” and “perpetual” contractual duration. As the Court emphasised, the two concepts are not synonymous. Describing an agreement as “indefinite” indicates that it has no fixed end date and assumes the possibility of future termination. It is intended to lock the parties in for all time. By contrast, a perpetual contract binds parties forever with no end date. Given the permanent and, arguably, significant consequences of a perpetual agreement it requires clear language and unequivocal language.

Here, the parties had chosen “indefinitely” – a word that naturally contemplates the possibility of the relationship ending, even if no express mechanism is provided. The Court found nothing in the language or commercial context to suggest the parties intended a perpetual arrangement, particularly given the evolving nature of professional practice within architecture and branding over time.

2. The Two‑Stage Test Reaffirmed

The Court reviewed the previous authorities on the common-law right to terminate on reasonable notice, and reaffirmed the two-stage test from Winter Garden Theatre (London) Ltd v Millenium Productions Ltd:

1. Is the agreement intended to be perpetual or merely indefinite?
   If perpetual, the contract truly has no end point. If indefinite, termination must be possible.
2. If indefinite, does a right to terminate on reasonable notice arise?
   Yes – because recognising that all parties must have the right to bring the agreement to an end (i.e. terminate on reasonable notice) is the only way to give effect to their common intention that the agreement is not perpetual.  

This approach rooted the outcome firmly in the construction of the contract, rather than implication of terms in the strict sense: the parties intended the agreement to be indefinite only, so the common‑law right to terminate was, therefore, part of the objective meaning of their words (and did not require a term to this effect to be implied).

3. Express Rights for One Party do not Exclude Common‑Law Rights for the Other

The Foundation argued that because the contract gave only the licensor express rights to terminate, this necessarily excluded any termination right for the licensee. The Court disagreed.

The presence of express termination rights for one party does not, without more, prevent the law from recognising a general right for both parties to terminate an indefinite agreement on reasonable notice. Those express rights are simply additional tools available to the licensor; they do not negate the common‑law position.

4. Commercial Reality Carries Weight

The Court also grounded its reasoning in commercial practicality:

• It would make little commercial sense for a professional architectural practice to be compelled in perpetuity to use and promote a personal brand, particularly when the value of that brand, and architectural styles, may shift over time.
• It is equally unlikely that parties intended obligations such as the requirement to promote the trade marks to subsist for centuries.

This “reality‑check” echoes a familiar theme in the Court of Appeal’s contract jurisprudence: words must be read in context, and commercial sense remains a vital guide.

5. What This Means for Contracting Parties

This judgment is a useful reminder that:

• Contract duration terminology must be chosen with care. If the intention truly is a perpetual commitment, the drafting must say so unambiguously.
• Stating that an agreement continues “indefinitely” opens the door to common‑law termination rights.
• Expressly one‑sided termination rights, do not, by themselves, exclude the other party’s common‑law right to terminate, unless the contract clearly provides otherwise.
• Commercial context remains highly influential. Courts will avoid constructions that freeze dynamic commercial relationships in time.

6. The Takeaway

This decision aligns with a consistent thread in the case law: courts are reluctant to treat commercial contracts as perpetual, unless they are compelled to do so. Where parties use language of “indefinite” duration, they should expect the law to fill in the missing piece – a mutual right to terminate the agreement on reasonable notice.

For businesses bound by legacy agreements or licences lacking express mutual termination rights, this case offers a helpful roadmap. It also serves as a valuable drafting lesson, to be unequivocal on duration and termination.