Abstract
This opus discusses the desirability of enforcing agreements made in perpetuity by contracting parties in English law. It uses the case of Zaha Hadid Limited v Zaha Hadid Foundation [2024] EWHC 3325 (Ch) as a central illustration and draws on lessons from French law to suggest possible developments within English law. It ultimately contends that Zaha Hadid was partially wrongly decided and seeks to construct a doctrinal framework opposing the entrenchment of perpetuity in English law, while aligning it more closely with neighbouring jurisdictions, including other common law systems. The paper challenges the traditional dichotomy between objectivity and subjectivity in contractual interpretation and argues for a broader interpretative principle in which construction and implication operate as two sides of the same coin. In doing so, it distinguishes between indefinite and fixed-term agreements and lays the groundwork for contesting perpetuity in modern contracts on the basis of common sense, commercial good sense and logical coherence.
Introduction
What is the legal value of perpetual agreements in English law? Does English law recognise a principle whereby no agreement can ever be perpetual? What would then be the consequence of such an agreement being entered into? Is it void ab initio or is a term implied whereby it can be determined at any time by either party subject to appropriate notice? Does the law recognise that every perpetual contract is open-ended and indefinite until such time that either party decides to determine it without cause where no exit clause is formally incorporated into it?
These questions are not purely theoretical. They have significant practical commercial repercussions, especially where the parties are not perfectly at arm's length. Even if they were, would it be desirable to enable parties to bind themselves in perpetuity and forfeit their freedom of contract, which necessarily entails its converse, freedom not to contract or resile from an agreement that falls short of hardship but is no longer desired, sustainable, or viable?
So much is evidenced by the recent case of Zaha Hadid Limited v Zaha Hadid Foundation [2024] EWHC 3325 (Ch), which reopens the debate on whether an exit clause may be implied or construed into an agreement intended to be perpetual. It departs from earlier cases where courts were prepared to imply a right to terminate a perpetual agreement on reasonable notice. However, in this case the court relied on the construction of terms by looking at the language of the agreement and its context to determine the issue. Despite the fact that the agreement was clearly one-sided, the first-instance court wrongly found no real doubt that the licence agreement involved would continue unless the licensor chose to terminate it, the licensee not having a corresponding right to terminate on notice.
Against this background, and using the case as a basis for reflection, this article argues that not only was the matrix of facts not accorded appropriate weight by the first-instance court which reached the wrong outcome, but more generally that English law should recognise a default, mandatory rule that a contract of indefinite duration is terminable by either party on reasonable notice unless the parties have instead chosen a genuine fixed term.
The argument is deliberately Anglo-French. It does not treat French law as an exotic source of analogy, still less as a quixotic and neutral curiosity. Rather, it uses French law because the modern French law of contractual duration gives clearer doctrinal expression to a proposition that English law already gestures towards but fails to articulate, that is, contractual freedom includes freedom from an indefinite juridical tie. 1
The reason Zaha Hadid Limited v Zaha Hadid Foundation [2024] EWHC 3325 (Ch) is the immediate occasion of this discussion is its importance in making explicit the limits of the current English approach. Where a professionally drafted agreement states that it is to continue ‘indefinitely’ but provides express termination machinery for one party only, English law is reluctant to supply a reciprocal right of termination on reasonable notice. The result is doctrinally orthodox, but commercially and normatively unsatisfactory. It leaves the weaker or locked-in party dependent on construction, implication, restraint of trade, frustration, breach or renegotiation, none of which directly answers the problem created by indefinite duration itself.
The article, therefore, distinguishes three questions which are too easily conflated. First, where a contract is silent as to duration, should English law imply a right of termination on reasonable notice? Secondly, where the contract is expressly indefinite but asymmetrical, should English law treat a unilateral exit right as a rule of law rather than as a matter of strained construction? Thirdly, where the parties have chosen a genuine fixed term, should the law respect that allocation of risk save in recognised cases such as breach, frustration, illegality, statutory intervention or hardship-type reform? The answer proposed here is yes to the first two questions and no to any general judicial power to rewrite fixed-term bargains.
It is argued that French law supplies a superior model of reference in that it separates these issues with unusual clarity. Articles 1210 and 1211 of the Civil Code prohibit perpetual commitments and provide that a contract of indefinite duration may be terminated at any time, subject to reasonable notice. Article 1195, by contrast, deals with imprévision (hardship): an unforeseeable change in circumstances making performance excessively onerous. The French scheme, therefore, avoids the conceptual confusion that appears in English law between construction, implication, hardship, public policy and restraint of trade. It allows indefinite contracts to remain binding while they last, but refuses to transform them into private servitudes. 2
The comparison is also historically legitimate for a common law audience. French juristic writing, especially Domat and Pothier, helped 19th-century English lawyers rationalise contract as a coherent body of doctrine. The Code civil itself supplied, or at least helped frame, important English developments in contractual damages in cases such as Hadley v Baxendale. 3 The point is not that English law should import French doctrine wholesale but it is that French law offers a disciplined model for a problem that English law has not yet solved in a principled way. 4 The comparison, therefore, speaks to a long-standing channel of doctrinal exchange rather than to an external civilian imposition. 5
The article makes four contributions. It first explains why, applying pure commercial good sense, Zaha Hadid makes little sense as far as perpetuity is concerned. It then shows why English construction and implication doctrine are poorly adapted to the problem and why rigid perceptions of pacta sunt servanda should be departed from, arguing that the current framework misidentifies the problem by treating indefinite duration as a matter of drafting rather than as a question of legal policy. Thirdly, it reconstructs the French position on perpetual obligations, and indefinite and fixed-term contracts. Finally, it proposes a modest English reform: a default mandatory rule of terminability on reasonable notice for contracts of indefinite duration, coupled with compensation only for losses caused by defective notice or abusive termination, not for the lost value of performance in perpetuity.
The central claim is deliberately modest. English law should not adopt a general power to revise commercial bargains for substantive unfairness. It should, however, adopt a rule that a contract of indefinite duration is terminable by either party on reasonable notice, and that any clause purporting to exclude all termination must be read, or if necessary controlled, consistently with that principle. The conclusion then explains why this reform would improve, rather than undermine, commercial certainty. The point is not to make contracts easier to escape. It is to make the legal consequences of indefinite duration predictable.
This proposed reform is not a general doctrine of substantive fairness. It does not authorise courts to rescue commercial parties from ordinary bad bargains. Its function is narrower, aiming only to prevent an indefinite contractual relationship from becoming irrevocable merely because the parties, or their lawyers, failed to include a symmetrical exit clause. In that respect, French law is not simply more interventionist, but it is also more coherent as it protects contractual autonomy by refusing to let an old act of will extinguish future legal freedom forever, which is both logical and desirable. 6
The argument is, therefore, addressed to English lawyers on English terms. It preserves certainty, respects fixed-term allocation of risk, and confines judicial intervention to a rule whose content is administrable: reasonable notice, good faith in the exercise of termination, and damages for abusive or abrupt termination where appropriate. In this context, the French law position should be adopted not because it is foreign or fashionable, but because it states the better rule. 7
Zaha Hadid as the problem case
Overview
The case revolves around a legal dispute where the claimant, Zaha Hadid Ltd (the ‘Licensee Company’), sought to terminate a licensing agreement binding it to the Zaha Hadid Foundation (the ‘Successor Licensor’) in perpetuity. 8 Renowned Iranian architect Dame Zaha Hadid (‘the Original Licensor’) had founded the eponymous Licensee Company and Successor Licensor Foundation.
In January 2013, Hadid entered into a non-exclusive licence agreement with the Licensee Company postdated to May 2013. The licence agreement aimed to enable the Licensee Company to exploit all registered marks of the name ‘Zaha Hadid’. Simultaneously, it aimed to preserve her legacy and enable her to receive a form of stable, lifetime income. This also purported to nip in the bud any potential negative media scrutiny of her personal accounts and finances given she used to receive irregular remuneration from the company by submitting ad hoc claims through a rather haphazard scheme of remuneration. The agreement, therefore, subsidiarily also intended to regularise what might have been perceived as problematic finances. 9 Upon her passing and by operation of her will, ownership of the marks was transferred to the Successor Licensor. The terms of the agreement remained unchanged. In exchange for payment of royalties to the Foundation equalling 6% of its net income for the licenced services, Zaha Hadid Ltd could continue to exploit the marks in perpetuity. 10
In 2024, the Licensee Company challenged the imbalance of the contract following disagreements between the current management of Zaha Hadid Ltd and Zaha Hadid's executors, especially regarding the ongoing relationship between the Zaha Hadid Foundation and Zaha Hadid Ltd. It sought a declaration entitling it to terminate the contract either under reasonable notice (12 months which the Successor Licensor agreed was a reasonable period 11 ) considering authority whereby indefinite agreements include a right of termination on reasonable notice. 12 In the alternative, it sought a declaration entitling it to terminate the contract based on a restraint of trade claim.
Both claims were unsuccessful, the court preserving the agreement on the basis that had the parties intended to enable each of them to terminate the relationship unilaterally, considering they are at arm's length, they could and would have provided for it in the contract whose terms are unambiguous. 13 While the judgment is doctrinally defensible within orthodox English construction principles, it exposes the weakness of those principles when applied to indefinite contractual duration: the court had no clean doctrinal tool for asking whether an indefinite commercial relationship should be terminable on reasonable notice as a matter of law.
Contractual architecture and imbalance: why the undesirability of the contractual imbalance warrants a prohibition of perpetuity
Under Clause 6, the payable profits are taken from company profits regardless of whether the profits come directly and exclusively from the use of the marks by the company or any of its subsidiaries. 14 It means, for instance, that if the use of the marks in a given year generates only 1% of the Licensee's turnaround, it will still be liable to pay 6% of its annual income to the Licensor per the payout-ratio formula incorporated into the contract. The commercial problem is not that the royalty was necessarily excessive when the agreement was made. The problem is that a royalty calculated by reference to the Licensee's wider net income may become increasingly detached from the value actually contributed by the marks. In a finite agreement, that risk may be priced. In an indefinite agreement it becomes qualitatively different: the burden can continue after the commercial premise that justified it has weakened or disappeared.
The marks are, therefore, not treated here as commercially irrelevant. They were plainly valuable. The narrower point is that brand value is dynamic and may decline, diversify, or become less causally connected to revenue over time. 15 A rule requiring reasonable notice termination for indefinite contracts is designed precisely for such cases: preserving the bargain while the relationship remains viable but preventing contractual duration from becoming an end in itself.
From a commercial perspective, it is certainly true that renowned businesses will attract customers more easily than outsiders and newcomers. Long-standing companies frequently monetise legacy trademarks via limited licensing. 16 But this typically represents only a small fraction of their revenues in increasingly competitive markets, 17 the largest part of their revenues coming from a combination of sales, product development, product innovation, property acquisition and/or investments. In other words, diversification. 18
The available financial material illustrates why the issue matters. The company's turnover increased substantially, but its pre-tax profit fell sharply over the relevant period. 19 That does not prove hardship, nor does it by itself prove substantive unfairness. It does, however, show why an indefinite royalty arrangement can become commercially distortive where the licensee has no reciprocal right to exit. The claim is, therefore, not that every perpetual or indefinite commercial arrangement is unconscionable. Nor is it that courts should impose an equal exchange. The more limited claim is that a contract with no fixed terminus ad quem should not be construed, implied or enforced as irrevocable unless the law supplies a reasonable mechanism of exit. It does not contradict pacta sunt servanda but identifies precisely what the law treats as the ordinary content of an indefinite obligation; which is developed below at 3.4.
On that view, the criticism is not that the court should have recalculated the royalty. English courts are not price regulators. The stronger point is that an indefinite contract whose economic burdens extend beyond the specific value of the licensed marks should be terminable on reasonable notice, subject to compensation for defective notice or abusive exercise where necessary. Brand equity is insufficient in and of itself to justify a 6% payout on all income in perpetuity when, even without facing hardship, the use of the marks has limited impact on a company's actual annual revenues. More so where the company's profit pre-tax, in the case at hand, lost c. 81% of its value in 2023 although its turnover more than doubled during that period. 20
The personal character of the agreement also matters. Hadid evidently wished to retain a measure of control over the use of her name and to support her legacy. That purpose is legitimate. It does not follow, however, that the Company should remain bound indefinitely after the personal and commercial context that produced the agreement has changed. No contracting party can fully anticipate the future operation of an indefinite obligation. The longer the duration, the greater the risk that a term that was intelligible at inception will become commercially or normatively disproportionate. The law should meet that risk by recognising a termination right on reasonable notice, not by forcing the party to frame the problem artificially as restraint of trade, frustration or mistake.
Insufficiencies of the English law on construction, implication, restraint and public policy, and the limits of pacta sunt servanda
Construction
Whether a party to a perpetual contract can determine it unilaterally depends on its terms and their construction 21 rather than implication. 22 The approach of the English courts is to interpret the words of the contract and their meaning. 23 The Licensee Company claimed that Clause 12.1 of the Licence Agreement should be read as ‘including a right by either party to terminate the licence agreement on reasonable notice, which exists in addition to the express rights of termination conferred on the Foundation (as Licensor)’. 24
Counsels for the claimant made an intelligent and cogent argument whereby the language of clause 12.1 (‘unless terminated earlier’) would not make sense if the agreement were ‘intended to be of truly indefinite duration, because there is no such moment in time as “earlier than forever”’. 25 The first-instance court, however, rejected that argument by adopting a strict, literal constructive approach inconsistent with the traditional English approach to construction contract. This consists of an objective inquiry into the meaning which the contractual language would convey to a reasonable person equipped with the background knowledge reasonably available to the parties at the time of contracting. 26 The test is not what Dame Zaha Hadid, the Company, or the Foundation subjectively intended. Nor is it a search for an abstractly fair result as the Court of Appeal rightly held on appeal, which seems to reject the view that the document is to be treated as speaking purely objectively by reference to a notional promisee's objectivity 27 or a detached and objective observer. 28 It is an inquiry into the meaning of the words used, read as part of the contract as a whole, in their legal, factual and commercial setting. 29 The difficulty, however, is that the ‘reasonable person’ is not a neutral lay observer reading the clause in isolation, which, it is submitted, is where the first-instance court erred. In commercial construction, the reasonable person is a legally constructed addressee: informed, contextual, commercially literate and placed in the position of the parties at the time of contracting. 30
This indicates that although agreements legally made are binding on those who have made them, the principle of pacta quantumcunque nuda servanda sunt (pacts, however naked, must be kept), better known as pacta sunt servanda, is not inconsistent with the principle of freedom of contract. While it requires that a yes be a yes and a no be a no, 31 and without engaging with its multilayered and rich history, which is beyond the scope of this paper, it simply and plainly means that effect must be given to the sole intention of the parties in context at the time the contract was made. It prevents the inclusion of terms that were not in the reasonable contemplation of the parties and supports the enforcement of contracts based on their objective contextual interpretation.
Objectively, any attempt at reading a term whereby Clause 12.1 should be construed as incorporating a right for the Licensee to terminate the contract is unsustainable on the papers. Had the parties intended for each of them to be able to terminate it at any given time with or without notice or cause, they should and could have provided for it at the time of contracting.
Nonetheless, the first-instance judgment was vulnerable because it treated objectivity too narrowly. It correctly refused to determine the case by reference to Hadid's uncommunicated subjective purpose, but it then placed excessive weight on the formal structure of Clause 12 and insufficient weight on the objective implications of the transaction as a continuing commercial relationship. The Court of Appeal corrected that approach by returning to the orthodox formulation: the contract must be interpreted objectively by asking what a reasonable person, with all reasonably available background knowledge, would have understood the language to mean; the contract must be read as a whole; and each proposed interpretation must be tested iteratively against the contractual scheme and its consequences. 32
The key point is that ‘objective’ does not mean literalist. English law rejects a purely internal, four corners approach where it produces artificial results. McMeel's treatment of construction shows that English law rejects an exclusively internal or ‘four corners’ approach: the words remain the starting point and often the controlling consideration, but they must be read in situ, with regard to the commercial purpose, the nature of the transaction, and the legal and factual matrix. A purely literal application of the objective principle risks literalism and may produce unreasonable or capricious results. 33 Context is not admitted to discover private intention, but to understand how the words would reasonably have been understood in their commercial setting. The reasonable person, therefore, asks not merely what the word ‘indefinitely’ can bear as a matter of dictionary meaning, but what it conveys in a trade mark licence between a licensor and an operating architectural practice, where the relationship was expected to endure but not necessarily to bind both parties forever. 34
That is where the first-instance reasoning became problematic. It assumed that because Clause 12.2 and Clause 12.3 conferred express termination rights on the Licensor, the absence of an equivalent express right for the Licensee must have been deliberate. That is a possible inference, but not a conclusive one. The maxim expressio unius est exclusio alterius is no more than an aid to construction. It must itself be tested against the contract as a whole, the nature of the transaction and the commercial consequences of the rival readings. The Court of Appeal was, therefore, right to hold that the maxim did not determine the outcome. A right for the Licensee to terminate on reasonable notice was not inconsistent with Clauses 12.2 and 12.3: Clause 12.3 dealt with immediate termination for default; Clause 12.2 gave the Licensor a specific right to terminate on three months’ notice; neither provision necessarily excluded a general right to terminate an indefinite relationship on reasonable notice. 35
The reasonable person test is especially difficult in this case because the factual matrix was unusual. Hadid was the founder, sole shareholder and original owner of the marks, but the Company was separately incorporated and the agreement was executed on its behalf by Mr Schumacher. Hadid's personal intentions could not simply be attributed to the Company without undermining the objective theory of contract. At the same time, the fact that she controlled the Company, had a conflict of interest and contemplated a future transfer of equity to Mr Schumacher and others formed part of the commercial setting. The error would be to treat those facts as evidence of her subjective intention. The correct approach is to ask what a reasonable person, aware of those facts, would have understood the agreement objectively to achieve. 36
On that footing, the Court of Appeal's reasoning is stronger. A reasonable person would not lightly conclude that an independent professional practice had agreed to bind itself perpetually to a brand identity, a 6% royalty and a positive obligation to promote the Licensed Services ‘on the maximum possible scale’, unless the language clearly required that result. Clause 12.1 did not use the language of perpetuity. It provided that the agreement would ‘continue indefinitely’. As the Court of Appeal held, ‘indefinite’ and ‘perpetual’ are not synonyms. The former denotes the absence of a fixed end date while the latter denotes an intention to bind without any terminal point. The distinction matters because an indefinite contract may continue until terminated, whereas a perpetual contract denies termination unless the contract itself confers such a right. 37
The interpretive issue should, therefore, have been framed in two stages. First, did the contract, objectively construed, create a perpetual obligation? Secondly, if not, how could an indefinite agreement be brought to an end? The authorities reviewed by the Court of Appeal support that structure. In Winter Garden Theatre, the House of Lords first asked whether the agreement was perpetual; only after concluding that it was not did it infer termination on reasonable notice. 38 In Staffordshire Area Health Authority, the Court of Appeal similarly rejected a literal reading of ‘at all times hereafter’ as meaning forever and construed the agreement as terminable on reasonable notice. 39
This two-stage method also avoids confusing construction with a broad fairness jurisdiction. It does not allow the court to rewrite the bargain because the royalty later became onerous. It preserves pacta sunt servanda by enforcing the bargain objectively made. But it also prevents pacta sunt servanda from being transformed into pacta in aeternum servanda: an agreement is not to be treated as irrevocable merely because it lacks a fixed expiry date. Perpetuity is a serious legal consequence and should not be inferred from equivocal language. 40
The reasonable person test, therefore, performs both a legitimating and a limiting function. It legitimises enforcement by preventing parties from escaping bargains through later assertions of subjective intention. But it limits enforcement by refusing to attribute to the parties a permanent surrender of commercial autonomy unless that is what their words, read objectively and contextually, require. In this case, greater care was needed precisely because the contract sat at the intersection of ordinary commercial licensing, personal legacy, corporate control and future institutional separation. The reasonable person had to be sensitive to all of those features without collapsing into either subjective biography or judicial paternalism.
The better view is accordingly not that Hadid's personal intention should have displaced the contract. It is that the objective reasonable person, knowing that the Company was intended to become an independent practice and that trade mark licences are continuing commercial arrangements, would not read ‘indefinitely’ as imposing a perpetual, one-sided lock-in. The implication, or inference, of termination on reasonable notice was not a judicial rewriting of the bargain. It was the legal consequence of construing the bargain as indefinite rather than perpetual. 41
Indeed, the exclusion of material facts indicating a shared understanding, particularly where evidenced by pre-contractual communication, obscured the true nature of the contractual bargain. The law does not preclude all reference to subjective intention as discussed but rather restricts access to internal, undisclosed beliefs. Where, however, the parties clearly and jointly proceeded on the basis of a particular context at the time of contracting, the rigid exclusion of such context risks displacing their true intention. Thus, the rejection of subjective intent as legally irrelevant ignores the evidentiary value of shared understandings demonstrated through communication at the relevant time and immediately after it. The binary opposition between objective and subjective intention is, therefore, misguided. The existence of a common understanding is not antithetical to objectivity but is its very expression in communicative conduct. 42
Recent developments in other jurisdictions, most notably Australia, demonstrate a growing recognition of mutual intention and shared meaning in contract interpretation. In Toll v Alphapharm, 43 the High Court of Australia took a more sensible view: what matters is what each party, by words or conduct, led the other reasonably to believe. This approach allows proper weight to be given to demonstrable mutual understandings, even if these are not formally recorded in the final written text, thus also contrasting with the English position in Statoil ASA v Louis Dreyfus Energy Services LP regarding unilateral mistake. 44 As Lord Hoffmann explained closer to home in Chartbrook Ltd v Persimmon Homes Ltd, while pre-contractual negotiations cannot be used to interpret a contract, they can technically be used to establish an estoppel by convention and operate effectively as if the prior negotiations were admissible as evidence of intention. 45
Undeniably, Hadid was on both sides of the transaction as Licensor and at least as shadow Licensee; that is, the controlling mind of the company in accordance with whose directions and instructions the directors of the company had to comply as a way for her to circumvent the prohibitions placed on her regarding avoiding conflicts of interest while effectively approving her own acts indirectly behind the scenes. Her presence on either side of the transaction was truly the crux of this case, which might have justified departing from strict principles of construction to account for the subjectivity of her intention at the time of contracting.
Any doubt should have benefitted the company contra proferentem. As the engineering mind of the agreement in the first place, her intentions are eminently relevant to the question of determining whether Clause 12 reflects the true intention of the parties or should be construed as having been intended to incorporate a mandatory right for the Licensee Company to terminate the agreement without cause should they choose to stop using the marks regardless of whether that subjective intention later changed after the agreement was executed.
Restraint of trade
The doctrine of restraint of trade enshrines the fundamental principle that individuals should be free to pursue their trade or profession and utilise their skills without unjustified fetters, clogs or interference. At its core, it invalidates contractual provisions, particularly restrictive covenants, that purport to limit an individual's freedom to work for others or to engage in business, unless such restraints are (i) designed to protect a legitimate business interest and (ii) are no wider than reasonably necessary to achieve that aim. 46
It is, therefore, erroneous, as the first-instance court suggested, to argue that the doctrine's scope is uncertain or that all contracts inherently restrain trade. 47 This is a misguided conflation. Not all contracts impose restrictive covenants, and not all parties are barred from entering into other trading relationships. To suggest otherwise is to confuse two distinct legal concepts: the binding force of a contract and a restraint on trade.
For instance, if A contracts to buy one tonne of copper ore from B, and B agrees to sell it, there is nothing preventing B from also selling another tonne to C. These are separate commercial transactions giving rise to independent obligations, neither of which can be relied upon to avoid performing the obligation to any of the other co-contracting parties. This prohibition is not a restraint of trade but merely gives effect to the binding force of contract.
However, contrast this with a situation where A is employed by B and agrees, upon resignation, not to work for a competitor within a six-mile radius. In this second scenario, A is prevented from working for C if C operates within the proscribed radius. This is a classic restraint of trade clause because it restricts A's post-employment economic freedom in a way that may be unenforceable if it fails the reasonableness test.
Most commercial contracts, particularly routine, transactional agreements, do not implicate restraint of trade principles. A principal contractor can subcontract work without affecting their agreement with the project owner; each obligation is discrete and governed by the rules of privity of contract. Merely entering into a binding contract does not of itself amount to a restraint on trade. It is precisely because restraint of trade concerns explicit restrictive covenants that a higher threshold must be met to justify judicial intervention. A mere interference with the general freedom to contract is insufficient. Indeed, the doctrine operates not to undermine contractual freedom, but to preserve a baseline of economic liberty against unreasonable encroachments.
Courts rightly require clear evidence of an unreasonable restriction on a party's ability to trade, one that cannot be justified in light of the contract as a whole and the parties’ legitimate interests. 48 The law demands more than a cursory nod to autonomy and calls for a contextual, purposive interpretation that looks beyond the wording of individual clauses to the overall structure and objective of the agreement. 49
The judgment in question, by construing restraint of trade too broadly, misunderstands the philosophy of contract law, which is not to insulate parties from their own bargains but to ensure they are not subject to unjust, anti-competitive restrictions. The doctrine is a shield against unreasonable encumbrances on liberty, not a sword to evade contractual liability. To suggest otherwise risks diluting a critical doctrine into irrelevance.
Ultimately, while the first-instance court rightly concluded that there was no restraint of trade, particularly in finding that the agreement did not unreasonably restrict the firm's ability to trade but instead served to incentivise broader commercial engagement and income generation, the judgment's treatment of the doctrine is not entirely sound. Although the court correctly held that the contract and the 6% payout ratio were not, in themselves, detrimental to the firm's commercial freedom, and that unfavourable terms do not amount to a restraint of trade per se, its reasoning fell short of fully grappling with the doctrinal implications of its own observations. 50
The court missed an opportunity (not addressed by the Court of Appeal either, as it allowed the appeal on construction 51 ) to underscore a key distinction: that commercially onerous obligations or uneven bargaining outcomes are not ipso facto restrictive of trade in the legal sense unless they cross the threshold of unreasonableness in scope, duration or impact on market participation. In so doing, the first-instance court's analysis risks conflating economic disadvantage with legal constraint and fails to articulate clearly that the doctrine of restraint of trade is designed to protect against unjustified restrictions on commercial autonomy, not to police the fairness of every contractual term. This would have been a far more compelling and coherent argument than the superficial and unpersuasive assertion that all agreements inherently entail some form of restraint of trade.
That reasoning reflects a fundamental misunderstanding of the doctrine, conflating the general binding nature of contracts with the specific, narrowly construed legal principle of restraint of trade. It is not every contractual obligation that amounts to a restraint, but only those that unjustifiably curtail a party's commercial freedom beyond what is reasonably necessary to protect legitimate business interests. To suggest otherwise is to drain the doctrine of all meaning, rendering it indistinguishable from routine contract enforcement and thereby undermining its function as an exception to the principle of contractual autonomy.
On the facts, the Licensee Company was not, in any meaningful sense, prevented from trading with others. It had entered into a non-exclusive licence agreement 52 that did not preclude it from conducting business with third parties. Rather, it had agreed, perhaps imprudently, to a one-sided 53 arrangement that entitled the Licensor to a share of all net income, irrespective of whether it was attributable to the licensed marks. The agreement was commercially unbalanced, but not legally objectionable in the sense contemplated by the doctrine of restraint of trade 54 since the Licensee company also benefitted somehow from the contract. 55
Crucially, no structural or operative feature of the contract restricted the Licensee's ability to enter new markets, expand its operations, or diversify its revenue sources. The company was not coerced into the agreement, even if it may have lacked the independence or clarity of thought to seek appropriate legal advice, an issue arguably complicated by Zaha Hadid's position on both sides of the transaction, pace the first-instance court's opinion.
The contested clauses did not impose obstacles to trading with others, nor did they disincentivise commercial expansion, a more subtle manifestation of restraint of trade that courts have occasionally recognised. 56 The proper test is truly one of public policy (i.e. in essence, a circumstantial test or test of circumstance checked by reasonableness 57 ). 58
Nevertheless, the judgment would have been stronger had it considered restraint of trade in the context of indefinite duration. A royalty burden may be onerous without restraining trade in the technical sense. Conversely, an indefinite contract may be objectionable even where it leaves the party free to trade with third parties. On the facts, the first-instance court's conclusion on restraint of trade is difficult to impeach. The licence did not prevent the company from carrying on business, entering new markets, or contracting with others. The 6% payment obligation was commercially burdensome, but burden is not restraint. However, the law lacks a distinct rule for the duration problem which negatively impacted the Company's ability to trade more profitably and made no commercial sense. Thus, it is submitted that commercial good sense should also serve as a yardstick against which indefiniteness should be assessed, to prevent nonsensical agreements potentially damaging to business development and society at large as indefinite commitment to marks that are losing their value inevitably affects the company's ability to trade efficiently although there may not be any restraint of trade in the technical sense.
Be it as it may, it is incorrect to interpret Carr LJ's reasoning (as she then was) in Quantum implicitly as a rejection or limitation of the ‘trading society’ test formulated by Lord Wilberforce in Esso. 59 It does not address the situation above specifically and does not prevent any expansion of the test in and of itself. Properly understood, her judgment appears to restate and modernise the doctrine, not caveat it. Indeed, the so-called ‘trading society’ standard inherently draws upon the customs, expectations and norms of commercial practice, 60 elements which are themselves deeply rooted in the concept of public policy. To characterise Lord Wilberforce's test as narrowly focused on the mechanical freedom to trade overlooks the broader jurisprudential ethos of his reasoning, especially when viewed in the context of his wider contributions to constitutional and administrative law. Read holistically, Wilberforce's judgment affirms that restraint of trade must be assessed contextually, with reference to prevailing commercial standards and values, 61 which aligns with the structured, yet flexible approach advocated in Quantum. Any perceived divergence between the two judgments is better understood as a matter of emphasis rather than principle. 62
Besides, this should not distract from the more general and much-needed discussion of whether it is desirable, reasonable and consistent with public policy, and indeed with the foundational principles of commercial and contractual freedom, to permit parties to bind themselves indefinitely. The court's rationale for dismissing objections to the nature of the bargain 63 rested heavily on the need to maintain predictability and certainty in commercial life. 64
Yet this judicial posture, while not without merit, arguably overlooks deeper normative concerns. It is submitted that the first-instant court erred in rejecting the challenge to perpetuity solely on the grounds of upholding commercial certainty despite public policy and reasonableness concerns. A more balanced approach would have involved weighing such certainty against the broader public policy imperative of preventing contractual arrangements that, by their very nature, may become unconscionable or commercially oppressive over time. Legal predictability is an important value, but it cannot, and should not, operate to legitimise permanent fetters on economic autonomy or allow one party to extract indefinite advantage under the banner of contractual sanctity.
From a public policy perspective, the law must be alive to the risks posed by agreements that lack temporal boundaries, particularly where they inhibit commercial adaptability, innovation or fair competition. The principle of freedom of contract is not absolute; it must be read alongside the equally important principle of freedom from contract, especially where the terms produce enduring asymmetry and restrict one party's ability to evolve with the market.
Alternative approaches and potential outcomes: lessons from France
Prohibition of perpetual obligations
French law prohibits perpetual obligations. The duration of contracts is now governed principally by Articles 1210 to 1215 of the French Civil Code. The 2016 reform did not emerge from nowhere. It consolidated earlier case law and special rules that had long expressed suspicion of commitments from which a party could never withdraw. 65 Its importance lies in making that suspicion general, explicit and administrable.
Several special provisions of the Civil Code had already reflected a reluctance to enforce commitments without an exit. Examples include rules on contracts for services, 66 partnership, 67 mandate 68 and loan for use. 69 These provisions matter because they show that Articles 1210 and 1211 did not invent the principle but simply systematised it. 70
The Constitutional Council (Conseil constitutionnel) has also linked the rejection of perpetual private obligations to freedom protected by Article 4 of the Declaration of the Rights of Man and of the Citizen. 71 This constitutional background explains why French law treats the prohibition of perpetual commitments not merely as a drafting rule but as a principle of private-law public order.
Article 1210 now states the principle directly: perpetual commitments are prohibited. Each contracting party may terminate the contract on the conditions provided for contracts of indefinite duration. Article 1211 then supplies the operative rule: where a contract is concluded for an indefinite period, either party may terminate it at any time, subject to the notice period contractually agreed or, failing agreement, to reasonable notice.
The sanction is, therefore, not automatic nullity of the entire contract. French law preserves the agreement while preventing perpetual duration. This is the feature that makes the French model particularly attractive for English reform: it is not hostile to contract, but hostile to irrevocability. The French rule also clarifies the difference between an indefinite contract and a fixed-term contract. An indefinite contract has no terminal date and is terminable on reasonable notice. A fixed-term contract binds the parties until the agreed term, subject to ordinary grounds of termination. The law, thereby, protects both freedom from perpetual obligation and certainty in fixed-term planning.
French case law also prevents parties from evading the prohibition by using formally fixed terms with automatic renewal mechanisms that, in substance, recreate perpetuity. 72 This is a useful lesson for English law: the rule should look to the practical duration of the obligation, not merely to drafting labels.
There are various special provisions in the Civil Code unchanged by the reform that reflect a reluctance towards commitments from which a party cannot withdraw. Thus, article 1780 of the Civil Code provides that one may only commit their services for a specified time or for a particular undertaking, while article 1838 provides that a company may not have a duration exceeding 99 years. Likewise, in case law, the Cour de Cassation sanctions clauses in leases or mandates that purport to bind a party for an indefinite period, without any right of termination. 73
This means that despite the lack of a general provision prohibiting perpetual obligations, piecemeal prohibitions were recognised in law regarding ‘special contracts’ by exception; that is, contracts that are subject to further requirements in addition to the general common rules governing contract formation, breach and termination.
The key contribution of Article 1211 in the general theory of contract is simply to make exit part of the legal structure of the relationship rather than a remedy dependent on breach or hardship. This also creates a subtle distinction between perpetuity and indefiniteness. An indefinite term is simply one that is open-ended and may be terminated by either party at any time, such as a permanent employment contract. This has the effect of reducing the effects of a perpetual commitment subject to sufficient notice being given to the other party, which is appreciated on a case-by-case basis. It further establishes a distinction between contracts of fixed and indefinite terms.
Distinguishing between contracts of indefinite duration and fixed duration
Indefinite contracts
Contracts of indefinite duration are those not subject to any termination date. These contracts may end through mutuus dissensus (i.e. mutual agreement of the parties) or through unilateral termination. This latter form of termination is by far the most significant. This rule is a codification of case law which had long since acknowledged that, barring contrary legislative provision, termination could occur through a simple unilateral expression of intent and without any particular formalities provided the right is not abused. 74 A party abuses the right to terminate if they act to harm their co-contracting party, or fail to give reasonable notice. 75 However, respecting a notice period does not shield the terminating party from liability. 76
Many questions remain open. It is not clear whether termination must be with or without cause, whether notice can be dispensed with, what is deemed sufficient notice, and what the sanction of abuse of right is. The ability to terminate the contract is a unilateral prerogative. Some authors suggest moderating this prerogative by requiring the exercising party to justify their decision. 77 Thus, the party who terminates the contract, or seeks to modify or not renew it, would be required to provide reasons. Positive law (i.e. statutory law), however, holds that such an obligation would violate contractual freedom and each person's right not to renew or to terminate a contract of indefinite duration. 78
In another case, a city council had made premises available to various unions. Based on article 1875 of the Civil Code, it sought to reclaim the premises. The unions argued that their public service mission, recognised by the Constitution and the ECHR, required the city council to justify its termination decision and provide them with new premises. The Court held that ‘the lessor may terminate at any time’ and that ‘the mission of general interest does not impose any obligation on the lessor’. 79 Some rulings, however, may hint at a shift. It has been held that a contracting party who terminated the contract by alleging false grounds incurred liability. 80 In the case at hand, a law firm terminated an associate's contract with four months’ notice but cited grounds (lateness, inappropriate behaviour) that were later found to be unfounded (the associate was well-rated and had received bonuses). The Court held that the termination was abusive. 81
This result is paradoxical if one considers that the grounds are irrelevant. Whether they are true or false should not matter if the agreement can be terminated without cause, absent any requirement for valid grounds. But it would seem the court's approach was dictated by considerations of contractual good faith and loyalty, sanctioning what it sees as dishonesty. Hence, it is advisable not to provide any reason, especially where the reasons are frivolous and have no basis in truth.
But it would seem that notice must systematically be given where determination is without cause unless the co-contracting party has committed a serious fault justifying unilateral termination at the risk and peril of the terminating party, considering articles 1224 and following of the Civil Code. What would constitute reasonable notice is determined in one of two ways: either arithmetically by considering the duration of the relation (i.e. the longer the relationship, the longer the notice) or teleologically by giving time to the terminated party to find alternatives. 82
Otherwise, if insufficient notice is provided, or where termination is intended to harm the terminated party, nothing is said in law and case law about the consequences of abrupt termination; that is, whether damages should be awarded or the parties be forced to continue with the contract. The report submitted to the President of the Republic during the 2016 reform of the French law of contract clarified that, in the absence of textual guidance, ordinary civil liability rules will apply where the co-contracting party has committed a fault. Novel article 1240 of the Code, which is identical to former article 1382, will apply: fault (e.g. too short a notice period, poor information), damage and causation must be proven, and the principle of full compensation for loss will cap the damages awarded. 83
Notably, this approach has not led to commercial instability, nor has it deterred parties from choosing French law or French courts as the governing law and forum in international commercial agreements. While this model remains unpopular in England and Wales, including in mixed jurisdictions such as Canada, 84 largely on the basis of divergences in understanding of the formless notion of public policy and public order, the French approach is arguably the most pragmatic and forward-thinking. It recognises the potentially disastrous consequences of perpetual contractual commitments, offering a legal framework that protects both economic actors and broader societal interests from the dangers of indefiniteness.
Ultimately, the French approach places greater emphasis on individual freedom and personal agency than on contractual immutability. It acknowledges that human will is dynamic, and that binding a party indefinitely to a contractual relationship that no longer serves them is inherently unjust. Such rigidity only fosters tension and the risk of breach, as parties may resort to defiance rather than remain trapped. This, in turn, undermines rather than promotes tranquillité publique, a fundamental pillar of public policy. In this regard, valuable lessons can be drawn from the country historically associated with revolution and liberty, which continues to uphold legal pragmatism in the service of both fairness and public order.
Fixed-term contracts
Fixed-term contracts are those that are subject, by the will of the parties, to a termination date in the sense of articles 1305 et seq. of the Civil Code and Article 1212 of the Civil Code. Unlike contracts of indefinite duration, which can be terminated at any time, a fixed-term contract must, except in cases of fault, be performed until its term. By asserting that the contract cannot be terminated before its expiration, one might think that the most natural sanction for premature termination would be specific performance of the contract. However, the Cour de cassation has ruled that the wrongful early termination of the contract only entitles the other party to nominal damages even where the contract incorporates a penalty clause stating otherwise (e.g. payment of sum equal to the full remaining portion of the contract until its term). 85 It is, however, important to note that the complaining party did not offer to perform its own obligations. Had they done so, specific performance as a remedy might have been conceivable.
Although it may seem contrary to the nature of a fixed-term contract, the parties may also provide for termination in the contract, in which case the court will apply the strict provisions of the contract and exclude compensation when such a clause is not stipulated in the contract. 86
Differently, where the fixed term has expired, it is accepted that no party can demand the renewal of the contract but may arrange the effects of expiration contractually. In fact, the renewal of contracts has given rise to substantial litigation. Case law tends to correct the effects of abusive resort to renewal, such as in employment courts where employers use a succession of fixed-term contracts to circumvent the rules governing dismissal, which apply only to permanent contracts or contracts of indefinite duration. In such a case, the courts tend to reclassify successive fixed-term contracts as a contract of indefinite duration. 87
Nevertheless, the current state of the law is that the expiry of the term results in the termination of the contract and a contracting party is under no obligation to renew its contract and is not required to justify its refusal to renew. 88 But the terminating party may be held liable if they have misrepresented an intention to renew the contract to the detriment of the terminated party, 89 imposed ruinous investments shortly before the expiry, 90 or committed an abuse of right. 91
This is without prejudice to the ability of the parties to make contractual arrangements regarding the expiry of the term and agree on extension or renewal terms, or tacitly continue to perform their obligations although the term has expired consistently with articles 1213 et seq. of the Civil Code. 92 Different rules apply to extension, renewal and tacit continuation.
Extension of the original contract
Regarding extension of the original contract, if a law comes into force between the formation of the contract and the originally agreed expiry date, it will not apply to the extended phase of the contract. Indeed, the rule is that new legislation does not apply to ongoing contracts, unless it is a matter of public policy. 93 If pre-contractual information was required by law, it will not need to be provided again because this is not a new contract: it is the same contract continuing, and thus no new pre-contractual information is required.
Articles L. 145–8 et seq. of the Commercial Code specify that it is the same contract which continues to produce effects between the parties. Article 1213 states that the extension of the contract must not infringe the rights of third parties. Thus, the contracting parties cannot, through extension, prejudice the rights of third parties. For example, a right of use granted for a certain duration over a property cannot be extended beyond the contractually agreed term if a promise of sale concerns that property upon the expiration of the said right: the beneficiary of the promise must be able to exercise the option over an unencumbered property (unless the promise expressly anticipates this scenario).
Renewal of the original contract
Concerning renewal, it refers to the situation where the law or a clause has organised the continuation of the contractual relationship. For example, the legislation governing leases sets out rules for renewing contracts. Likewise, it is common for contract clauses to state that ‘failing termination by registered letter with acknowledgment of receipt at least three months prior to its third anniversary, this contract will be renewed for an identical period’.
Article 1214 of the Civil Code provides that ‘renewal gives rise to a new contract whose content is identical to the previous one but whose duration is indefinite’. The effects of renewal are therefore threefold:
First, it is a new contract. The practical consequence of this succession of contracts concerns the ancillary contracts (e.g. surety agreements) that were attached to the first contract. Unless otherwise stipulated, they do not guarantee performance of the second contract. Furthermore, since it is a new contract, the applicable law is that in force on the date of the renewal. 94 Finally, if pre-contractual information was required, it must be provided again since the renewed contract is a new and different contract.
Second, it is a contract of indefinite duration. This means that each party may terminate it at will under the conditions provided for in Article 1211 of the Civil Code. This rule is designed to protect the parties and to prevent them from being bound by successive fixed-term contracts which they may have failed to terminate. However, as the rule is not of public policy, nothing prevents the parties from providing that the renewed contract will have a fixed term. This is often the case in consumer contracts. The subtlety of this mechanism often takes consumers by surprise, locking them into the terms of a new contract (with clauses stipulating that, in the absence of notice, a new contract is formed for the same duration). The Law of 28 January 2005 strengthening consumer trust and protection introduced some safeguards. Now, Article L. 215-1 of the Consumer Code provides that ‘the professional service provider must inform the consumer in writing, no earlier than three months and no later than one month before the expiry of the period authorising the refusal of renewal, of the possibility of not renewing the contract concluded with a tacit renewal clause’. Useful though it is, it is not certain that this protection is watertight. 95
Third, it is a contract with the same content (except duration) as the previous one. This marks a subtle reversal, or clarification, of case law. A decision of 15 November 2005 had indeed specified the effects of tacit renewal: ‘except where otherwise provided or intended, the tacit renewal of a fixed-term contract, whose original term has expired, gives rise to a new contract of indefinite duration, and whose other terms are not necessarily identical’. 96
The final point was the most innovative. This solution, however, was criticised because tacit renewal rests on the presumed intention of the contracting parties to continue their relationship on the same terms as the previous contract. It is not clear what the point is of using renewal to end up with a contract that is not ‘necessarily identical’ to the previous one. The solution has, in any case, been significantly softened since the Cour de cassation has since ruled that the continuation of a contract beyond its term gives rise to a new contract which has the same content as the previous one. 97
Tacit continuation of the original contract
Finally, tacit continuation is where the parties continue to perform the contract even though its term has expired. Although not provided for by law or by the contract, it produces the same effects as renewal.
Practical consequences
Undeniably, French law demonstrates the depth and versatility of its juristic arsenal, particularly in its pragmatic application to commercial contexts that demand adaptability and the capacity to disengage from dysfunctional contractual relationships. By clearly distinguishing between fixed-term and indefinite contracts, the French legal system strikes a nuanced balance between legal certainty and contractual flexibility. It preserves the binding force of fixed-term agreements, prohibiting unilateral withdrawal except in the event of serious breach or express contractual provision, while permitting parties to indefinite contracts to terminate the relationship when time and evolving circumstances render its continuation undesirable.
This dual regime avoids undermining the sanctity of contract while recognising that the will of contracting parties is neither static nor immutable, especially since commerce is inherently volatile and driven by dynamic forces. To expect a commercial entity to remain perpetually bound to a contract in a shifting economic and strategic environment defies common sense, commercial logic and legal rationality.
It is high time English law moved beyond its insular and overly rigid treatment of perpetuity and embraced a more pragmatic and commercially attuned perspective. The French example demonstrates that flexibility need not jeopardise certainty or stability. On the contrary, structured safeguards, such as notice requirements, duties of good faith negotiation or mediation and compensation mechanisms, can ensure fair disengagement while preserving the integrity of commercial relationships. The message is clear: perpetuity is an outdated ideal in a world where adaptability is essential.
French law demonstrates that the key factor necessary to identify whether a contract is definite or indefinite is whether a theoretical term is provided, respecting the will of the parties where a fixed term is provided and intervening to prevent lock-ins where no such term is provided without detriment to the terminated party. 98 The Cour de Cassation has also recognised that fixed-term contracts can be used to circumvent the prohibition of perpetuity, such as by providing for automatic renewable clauses. This means that the defect of perpetuity can arise in fixed-term contracts too and the duration clause must be construed systematically in concreto. Thus, in Bois & Matériaux, the Cour de Cassation sanctioned a lock-in clause in a fixed-term lease even if each party had a right of termination. 99 Arguably, the court erred on the side of construction since the clause was not perpetual in and of itself, since the termination term and option were exercisable by either party. The decision only makes sense if construed as a means of correcting the contractual imbalance contained in the agreement between the parties.
Ultimately, the French approach places contractual autonomy on both sides of time. It respects the original decision to contract, but also preserves the future freedom of each party to leave an indefinite relationship on reasonable notice. That is why it is superior to the current English model. It demonstrates a more versatile and coherent treatment of contractual duration. It does not collapse all long-term contracts into one category. It distinguishes fixed terms, indefinite duration, renewal and tacit continuation, and attaches different consequences to each. That dual regime preserves pacta sunt servanda where the parties have chosen a term, while refusing to infer an intention to be bound forever from the absence of one. English law would be improved by adopting that distinction explicitly. For that reason, French law offers a more pragmatic blueprint than the approach taken in Zaha Hadid. It protects the continuity of the contractual relationship while it lasts, but it does not mistake continuity for permanence. The model may be unfamiliar to common lawyers because it gives statutory form to a proposition English law tends to approach through construction and implication. That is not, however, a reason to reject it but a reason to recognise that the English tools are indirect and often inadequate.
Rethinking English jurisprudence: pathway to reform
The piecemeal suspicion of perpetuity in English law
In fact, English law exhibits a similarly piecemeal yet pervasive jurisprudence, largely unacknowledged, where perpetuity is generally disfavoured in favour of indefinite but finite or terminable arrangements. This position is most visible in the context of trusts. Although trusts are not contracts strictly speaking but can arise from contracts, the broader point is the underlying disfavour in law for perpetuity in favour of indefinite agreements.
With the exception of charitable purpose trusts, which may lawfully endure without time limit so long as trust assets are not depleted because they support a public interest, 100 English law generally does not permit permanent trusts. 101 Trusts are inherently temporary mechanisms for managing property, intended to serve as interim rather than perpetual arrangements. For instance, where beneficiaries hold vested interests in the trust property, the rule in Saunders v Vautier provides a mechanism for terminating the trust prematurely. 102 This rule empowers adult beneficiaries of sound mind with vested interests (or with contingent interests provided they act together) to terminate the trust unanimously and demand transfer of the legal title.
Trustees are, in addition, obliged to exercise their discretion within a reasonable timeframe, limiting the practical lifespan of the trust. 103 Most modern trust instruments include a defined ‘trust period’, expressly stating how and when the trust is to be brought to an end. At the expiry of this period, the class of beneficiaries will close, and distribution occurs to those who qualify at that time. But when a trust instrument omits any limitation on its duration, the law categorically recognises that it cannot continue indefinitely, at least for non-charitable trusts. 104 The public interest militates against tying up property forever. 105 Trusts are, thus, carefully time-limited, either by statute or instrument, with perpetuity periods strictly enforced. Even in this traditionally conservative domain, indefinite control over assets is curbed to preserve the circulation of property and the dynamism of legal relations. Hence, English law imposes two perpetuity rules to constrain trust duration: the rule against remoteness of vesting and the rule against inalienability.
The rule against remoteness of vesting, now statutory under the Perpetuities and Accumulations Act 2009, mandates that beneficial interests in the trust property must vest within a legally recognised perpetuity period, typically 125 years per s5(1). Although a settlor may elect a shorter period, it is not legally possible to exceed this limit. If an interest fails to vest within this period, it becomes void. While the Perpetuities and Accumulations Act 2009 is of limited scope and only applies to property instruments relating to trusts, wills under the doctrine of executory bequests, and powers of appointment, 106 thus excluding most commercial contracts, 107 its philosophy and underpinnings provide a useful, structured approach to reflecting on how to handle long-term obligations to support a more balanced approach to agreements made in perpetuity. It involves similar concepts of legal certainty, freedom of contract and reasonableness as those decisions that previously converted perpetual agreements into indefinite agreements.
Other examples include land law 108 or employment law 109 where agreements are required to have certainty of term, one that can be reconstructed on the facts if not provided for. There is, in fact, no general permanence of duration in any type of contract. 110 Thus, the resistance to perpetuity runs through multiple areas of English law, even if it is not always made explicit. The Perpetuities and Accumulations Act 2009 is a formal articulation of this aversion, limiting the duration of non-charitable trusts to 125 years. Courts in other domains may not always rely on express statutory rules, but they follow an analogous logic. This convergence suggests the underlying existence of a broader principle: that perpetual arrangements are inherently suspect and should be read, wherever appropriate, as incorporating an implied right of termination on reasonable notice or be construed as entailing one.
In truth, it is doubtful whether the issue of perpetuity ought to be confined to discrete areas of law. A broader doctrinal and jurisprudential approach is warranted, one that considers whether perpetual obligations of any kind should be understood as subject to an implied term at law permitting their termination, subject to appropriate conditions. Perpetuity is not a challenge unique to one legal domain; rather, it presents as a recurring issue across multiple fields. There is, therefore, a compelling case for rationalising the disparate strands of jurisprudence that address its various manifestations, with a view to achieving greater coherence in the law as a whole.
The core policy concern in cases involving perpetuity is whether it is desirable, or justifiable, for any party to be bound indefinitely by an agreement, with no clear mechanism for exit, regardless of cause or compensation. While different areas of law provide their own mechanisms for navigating long-term obligations, a broader view reveals a consistent legal discomfort with arrangements that endure indefinitely. English law, like many modern legal systems, tolerates indefinite commitments within defined legal boundaries, but it fundamentally resists absolute perpetuity. Even Parliament, the supreme legislative authority, cannot bind its successors irreversibly, 111 subject to political realities. 112
Obligations, particularly commercial ones, must remain subject to objective limitations. Even without triggering the doctrine of hardship, such constraints are necessary to safeguard personal liberty and preserve the freedom to contract. Legal certainty cannot operate as an absolute; it must coexist with the practical need for flexibility and responsiveness to change. This was vividly illustrated in the Zaha Hadid licensing dispute, where it was apparent that the agreement had ceased to serve its original commercial purpose. Businesses must constantly reinvent themselves to stay competitive and contribute to the broader economic, social and public good. Commercial contracts that lack flexibility risk becoming instruments of economic stagnation. Predictability remains important for sustaining legal and commercial confidence, but the law must also recognise when that predictability becomes counterproductive, when it stifles innovation, responsiveness and competitiveness.
The court in the Zaha Hadid case appeared motivated by the principle that commercial certainty, particularly regarding duration and obligations, must be preserved. However, this approach arguably fails to account for the dynamic nature of economic actors and their ever-shifting needs. Witnesses themselves acknowledged that it is commercially damaging to bind parties to an agreement whose benefits are driven by variables outside their control, including branding, leadership, staff capabilities and changing consumer tastes. 113 Unanticipated reputational damage, as hypothetical as it may be, could make association with a once-iconic brand undesirable, leading to loss of business. Similarly, the breakdown of trust or collaboration between contractual parties can render performance impracticable, if not impossible. English company law recognises this through remedies for total breakdowns in corporate governance, 114 and family law permits dissolution of marriages irrespective of residual financial benefit. 115 So too should general contract law resist locking commercial entities into perpetual obligations that may turn destructive and, even if they do not, more generally.
Where only one party holds the power to terminate a supposedly ‘perpetual’ agreement, this asymmetry raises questions of substantive fairness. Indeed, the weight of legal authority supports the view that perpetuity is to be disfavoured, with a strong presumption in favour of implied termination clauses. English courts have long upheld the principle that even where a contract lacks an express termination provision, the contract may be construed, based on admissible evidence, as containing a right to terminate on reasonable notice (rather than through implication) to prevent indefinite subjection. 116 This jurisprudential thread, discussed further below, reflects a deeper policy concern about ensuring fairness and promoting economic efficiency.
French law offers a useful comparator, adopting a more explicit doctrinal position favourable to the hybridisation of implication and construction rather than construction only, thereby avoiding legal inertia while preserving fairness to the terminated party. This system has not undermined commercial reliability or increased litigation risk. Rather, it balances legal certainty with commercial pragmatism, a model worth reflecting upon in the English context.
The policy rationale is clear. Commercial parties must retain some capacity to adapt, exit and restructure as circumstances evolve. To compel a business to continue a venture that no longer aligns with its strategic interests, especially where risks have materialised or performance has deteriorated, is not only commercially irrational but it is also socially harmful. The failure of a business affects employment, supply chains and communities, ultimately increasing reliance on public support and diminishing economic resilience. 117 Scholars like Bourdieu have observed how structural immobility entrenches disadvantage; 118 legal frameworks that lock entities into unprofitable or outdated ventures risk perpetuating precisely that kind of structural inertia.
Ultimately, the judiciary must strike a careful balance between preserving the sanctity of contract and recognising the legitimate need for contractual evolution. Flexibility does not imply unpredictability, nor does it erode trust in legal enforcement. Instead, it acknowledges that legal relationships, like economic conditions, must remain responsive and adaptive. The aim is not to undermine stability, but to ensure it remains meaningful and sustainable. As such, perpetuity, except in the rarest and most justified contexts, should remain the exception, not the norm, in English law.
Rather than relying solely on a constructive approach, a hybrid method blending construction with implication and supplementation would be more appropriate. This would allow courts to uphold indefinite agreements even where a fixed term is disputed, with reasonableness and public order serving as guiding principles. Such an approach is particularly justified in cases like the one at hand, where the contested clause, though ostensibly unambiguous in its perpetual framing, is cast into doubt by evidence suggesting that Zaha Hadid herself may not have intended true perpetuity at the time of contracting. 119 As such, implication, insofar as it invites the court to discern the true intention of the parties and uncover the underlying purpose of the agreement, offers a pragmatic route to defeating perpetuity without the need for overly intricate or abstract analysis at the outset. Where implication alone proves insufficient, a purposive approach grounded in principles of public order and reasonableness may serve as a safeguard providing a normative framework to prevent unjust entrenchment and uphold the integrity of contractual and commercial relations.
Rethinking the construction-implication quandary
Lord Hofmann's analysis in Belize Telecom 120 is particularly apposite. Although the decision, delivered under the jurisdiction of the Privy Council, has since received mixed judicial treatment and has been subject to criticism, it is argued that it should remain highly persuasive. Arguably, perpetuity was a latent issue in Belize, a case concerning the interpretation of a company's articles of association. Notwithstanding its contested legacy, Lord Hoffmann's approach offers a compelling and intellectually coherent framework for interpretation, arguably the most conceptually robust and doctrinally sound to date.
Lord Neuberger's speech in Marks & Spencer 121 merely highlights that Lord Hofmann's amalgamation of construction and implication could be confusing, opening the door to multiple possible interpretations. Lord Hofmann's approach was more directly criticised by Lord Leggatt in Tesco Stores, where he stated that ‘it is misleading in so far as it suggests that the process for deciding whether a term is implied is no different from the process of identifying the meaning of the express terms’ (sic). 122 Lord Hofmann's reasoning seemed to trouble Lord Leggatt more than Lord Neuberger. However, Lord Hoffmann never claimed that implication and construction followed the same process; rather, he said both rely on similar factors. His point was about similarity, not identity. Both approaches reject the notion that courts should improve upon the instrument before them. But both require some relevant background knowledge. A term cannot be ‘so obvious as to go without saying’ without first construing the agreement as a whole to discern the parties’ intention, then implying the omitted term due to poor drafting if strictly necessary. Conversely, proper construction, even if implicitly, may require considering whether a term needs to be implied under a strict necessity test to give the agreement full meaning. Unless strictly necessary, implication fails, and construction merely clarifies the agreement as it stands. Both processes, therefore, demand intellectual effort and share common denominators, even if they serve distinct purposes. They are ultimately two aspects of the same doctrine: interpretation. Case law provides interpretive guidelines that prioritise identifying the parties’ intention over the literal wording. The spirit of the agreement should prevail over clumsy drafting.
Without a shadow of a doubt, interpretation involves reading the contract as a whole to ensure coherence. Implication then supplements the terms without contradicting the agreement's overall structure. Interpretation thus has a passive side (divining meaning) and an active side (filling gaps) consistent with the agreement's architecture. Lord Pearson's observation in Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601, 609, agreed by Lord Diplock and Lord Guest and considered by Lord Hofmann in Belize, is telling: ‘The proposition that the implication of a term is an exercise in the construction of the instrument as a whole is not only a matter of logic (since a court has no power to alter what the instrument means) but also well supported by authority’. 123 It is functionally impossible to decide on implication without some construction. Compartmentalising the two is both illogical and artificial. Lord Hoffmann's approach was simply logical, avoiding absurd results such as implying a term inconsistent with the agreement's structure or intention, thereby making the contract worse for one or both parties. Just as the courts cannot improve upon an agreement, they must not derail it and make it any worse. The means of implication (whether in law or in fact) do not alter the principle. Criteria such as ‘business efficacy’, ‘necessity’ and ‘so obvious as to go without saying’ all lead back to the same question Lord Hoffmann posed: ‘what the instrument, read as a whole against the relevant background, would reasonably be understood to mean’. 124 Serjeant Robert Catlyn (as he then was) illustrated this interplay in Browning v Beston (1555) Plow 131, 140 where he said that ‘our Law, which is the most reasonable Law upon Earth, regards the Effect and Substance of Words more than the Form of them, and takes the Substance of Words to imply the Form thereof’. 125
This duality of interpretation (active and passive) has a functional analogue in French law. At the substantive level, the common intention justifies the reasonable nature of an interpretation. A reasonable solution is determined and then attributed to the parties, in line with the adage interpretatio cessat in claris. 126 One also seeks to justify the equitable nature of a decision, often by adding implicit obligations of equity or as provided by law or custom. 127 This is precisely because the interpretation of a contract aims to discover the common intention of the parties, the main methods including systematic interpretation (reading the contract as a whole to maintain coherence) and searching for the common intention of the parties (which prevails over the literal meaning of the terms).
Implicit clauses, for their part, are obligations not explicitly written but derived from the nature of the contract, usages, or good faith, filling contractual gaps. Determining content by reference to equity, usage or law (on the basis of former article 1135 of the French Civil Code) is traditionally seen as creative interpretation, 128 though in reality it simply applies existing legal rules to the disputed agreement. This enables the Cour de cassation to ensure uniformity of legal rules, regardless of contract diversity. Romano-Germanic systems typically adopt a flexible criterion, granting broad interpretive freedom for gap-filling, often through ‘general clauses’. The most widespread, due to French influence, it assumes that contracts bind parties not only to express terms but also to requirements arising from good faith, equity or the contract's nature. 129 Present in the 1804 French Civil Code under Article 1135, this approach is maintained in new article 1196 following the 2016 reform. Similar principles exist in the United States (UCC §1-203; Second Restatement §205) and in other jurisdictions, such as Colombia (Civil Code Art. 1.621.II) and the Dominican Republic (Art. 1.160), which presume commonly used clauses even if not expressly stated. As such, French law and English are not as far apart as might be thought, as shown particularly in Staffordshire, 130 Winter Garden 131 and Martin-Baker. 132
In Staffordshire, the contract contained no provision for termination by either party. In Winter Garden, only the licensee could terminate the agreement, including where the licensor breached its terms. In Martin-Baker, either party could terminate in case of breach. In each instance, the court held that the true construction of the contract allowed termination where the term was left open-ended. 133 This was especially so in Staffordshire, where inflation had so changed the circumstances as to justify termination without applying hardship criteria on equitable grounds, thereby safeguarding legal certainty. 134
Agreeing with Sir Valentine Holmes K.C. and Thomas Roche for the appellants in Winter Garden, 135 unless the terminating party has explicitly bound itself in perpetuity, there is no justification for holding it so bound. Even if it has, reasonableness and public policy should permit either party to terminate where circumstances have changed so significantly; by virtue of the adage to the impossible, none is bound. Even absent a change in circumstances, the ability of at least one party to terminate the agreement without cause is a strong indication that it was never intended to be truly perpetual since intention trumps the literal words of the agreement. Thus, construction and incorporation cases alike recognise that the outcome may not reflect the parties’ subjective or internal expectations. Beyond these considerations, a licence, as the word suggests, is inherently a temporary transmission of a personal right. Nothing in the nature of this specific agreement (merely a grant of authority necessarily implying temporariness) suggests perpetuity in and of itself. This is confirmed by Lord Porter in Winter Garden 136 where he held that ‘It is one thing to say that a limited and temporal licence remains in force until the particular object for which it is given is fulfilled or the definite period of time has elapsed, it is quite a different matter to allege that a licence once given in general terms can never be terminated. To my mind the whole historical development of the law is against such a contention’. 137
English law should, therefore, move beyond its current reliance on constructional inference. A French-style rule would be modest, predictable and commercially sensible: indefinite contracts should be terminable on reasonable notice; fixed-term contracts should remain binding until their agreed expiry; hardship should remain a separate question. Put differently, English law should not enforce indefinite contracts as if they were irrevocable. Zaha Hadid shows that the present law leaves too much to drafting happenstance and too little to principle. The court's reasoning may be orthodox, but the orthodoxy is incomplete. Recognising a right to terminate indefinite contracts on reasonable notice would not undermine legal certainty but would increase it. Parties would know that if they want a fixed commitment, they must choose a fixed term; if they choose indefinite duration, the law supplies an orderly exit.
Nor would the rule license opportunistic escape from bad bargains. Termination would operate prospectively. It would require reasonable notice. Damages would be available for defective notice, abusive termination or breach of accrued obligations. What would not be available is a claim to profits in perpetuity merely because the contract lacked an end date. The French model is superior because it offers exactly that balance. It rejects perpetual obligations as inconsistent with freedom, but it does not make contracts fragile. It preserves fixed-term bargains and supplies a clear rule for indefinite ones.
For England and Wales, the reform could be statutory or common law. A statutory provision would be cleaner. It should state that a contract of indefinite duration is terminable by either party on reasonable notice, that any exclusion of all termination is ineffective to the extent that it creates a perpetual obligation, and that compensation is limited to losses caused by failure to give reasonable notice or by abusive exercise of the right. Compensation, if there is one, should be limited to reliance losses or transitional losses caused by insufficient notice, not expectation losses calculated on the basis of perpetual performance. Reasonable notice should, in turn, be assessed by reference to the nature of the relationship, investments made in reliance on continuity, market practice and the time reasonably needed to reorganise. Parties should remain free to define objective termination triggers, minimum terms, review dates and notice periods, provided that the contract does not become irrevocable in substance. Periodic renegotiation or review clauses should be encouraged in long-term commercial contracts, but their absence should not prevent termination of an indefinite relationship on reasonable notice.
Nothing is added that did not already exist. Construction and implication merely spell out the instrument's meaning. Sometimes that involves reading in a term incorporated by reference, conduct or law; other times, it involves resolving ambiguity in unforeseen circumstances. 138 The key difference is that implication addresses what is unstated but necessary for the agreement's coherence, whereas construction addresses the meaning of what is stated. Implication fills gaps; construction interprets existing text. While their aims differ in practice, those differences require precision and differentiation, though not one of doctrine and fundamentality but one of practice and practicality, both drawing from the same reservoir of ideas, values and principles. Implication cannot occur without some construction, even if only to ensure the agreement's overarching intention is preserved.
Adopting such an approach would carve out duration as a distinct issue separate from hardship, force majeure, frustration and material breach, which should remain distinct doctrines, not substitutes. By adopting these safeguards, English law can maintain commercial certainty while avoiding the oppressive effects of indefinite obligations with no reciprocal exit. The reform would not make English law less committed to contract but would instead make it more faithful to contractual freedom properly understood.
The foundational aim of contract law, whatever the system of law, is to uphold the true bargain made by the parties and prevent a rogue from perjuring themselves. 139 To exclude credible evidence of their shared understanding of context under a rigid adherence to objectivity may, in certain instances, defeat that aim. The courts, in practice, have often found mechanisms to give effect to such understandings. It may be time for the law to recognise this reality more explicitly, thereby reducing reliance on artificial distinctions such as between objective intention and subjective intention or construction and implication that obscure rather than reveal the parties’ true agreement.
Rethinking public policy and reasonableness as a further basis for reform in English Law
English law is generally sceptical of substantive fairness review in negotiated commercial contracts. It does not invalidate a bargain merely because it is uneven or a bad bargain. 140 The fact that the Licensee derived some benefit from the licence is, therefore, relevant but not conclusive. It explains why the agreement was not simply irrational. It does not answer whether an indefinite relationship should be legally irrevocable. The duration issue remains distinct from the substantive fairness of the royalty. The available English doctrines channelled the claimant into arguments that obscured the real point. The real issue is whether indefinite agreements should be deemed to be determinable with or without notice/compensation as a matter of public policy. The argument should not depend on judicial intuition about the correct commercial price or redistributive justice.
French law is attractive here not because French commercial judges are necessarily better placed to assess business reasonableness, but because French doctrine separates public order, good faith, hardship, fixed duration and indefinite duration. That taxonomy gives lawyers a clearer route to the answer than the English search for constructional ambiguity. English law is, therefore, not asked to embrace a general doctrine of contractual equity. The proposed reform is narrower and more administrable: an indefinite commercial contract remains binding until terminated, but either party may terminate it on reasonable notice. Such a rule is not judicial rewriting. It is no more radical than other terms implied by law into recognised classes of relationship. The content of the rule would not depend on a court's view of the bargain's substantive adequacy, but on the objective fact that the contract has no fixed terminal point.
The true issue is, therefore, whether English law should treat terminability as an incident of indefinite duration. French law answers yes. English law should do the same, either through statute or through a carefully delimited term implied in law. The public interest at stake is not a free-floating preference for fairness. It is the more specific interest in preventing private law from enforcing irrevocable economic relations where the parties have not chosen a fixed term. That interest is compatible with commercial certainty because it gives advance notice of the rule. The debate should, therefore, be framed around administrability and institutional competence. Courts should not police the adequacy of royalties, but they can assess reasonable notice. That is a familiar inquiry, already used in employment, agency, distribution and other continuing relationships. 141 The argument is not that English law already possesses a free-standing jurisdiction to reprice an imprudent bargain merely because it is substantively uneven. That would misdescribe the orthodox position. 142 English law remains deeply attached to freedom of contract, commercial certainty and the remedial model of expectation rather than judicial paternalism. Its concern with substantive unfairness usually operates through recognised gateways – mistake, misrepresentation, duress, undue influence, unconscionable dealing, penalties, restraint of trade, statutory controls or procedural defects in assent – and not as a general power to save a party from a reckless or improvident bargain. 143 The present case is, therefore, not best framed as an invitation to make English law generally redistributive. It is better framed as a narrower problem of indefinite obligation: whether a contract that contains no reciprocal exit mechanism should be treated as incomplete in a way that threatens the very autonomy that freedom of contract is meant to protect.
This qualification matters because contract law itself is ideologically plural. Charles Fried treats contractual liability as grounded in the moral force of voluntary undertaking; 144 but even promise theory must explain why a legal system should enforce some undertakings and not others, and why the remedial response to non-performance is normally damages rather than coerced (i.e. specific) performance which is not the norm in English law but the exception. 145 Other accounts treat contract as an institutional practice for coordination, cooperation, reliance, market planning and the facilitation of agreements rather than as a simple moralised command to keep every promise whatever the consequences. 146 On those accounts, a perpetual contract with no bilateral exit is not merely a hard bargain. It risks converting a facilitative legal institution into a device of continuing domination. French law is superior at precisely this point as it does not authorise judges to remake every unequal contract but identifies a specific structural defect – perpetuity or indefinite duration without exit – and cures it through a predictable default or mandatory rule of termination on reasonable notice.
Roger Brownsword's work is useful in this respect because it reminds the analysis that contract law is not ideologically monolithic. It may be read through market-individualist, consumer-welfarist, relational and social-market lenses, each of which supplies a different answer to the question whether law should merely enforce bargains or also police the conditions under which bargaining power is exercised. 147 The proposed Anglo-French argument, does not, therefore say that English law must abandon its values. It says, instead, that French law gives better effect to one of those values – contractual autonomy – by recognising that autonomy includes an exit from indefinite obligation. The French rule is, thus, not anti-market or anti-contract. It is a cleaner market rule than the English position because it avoids forcing courts to disguise a structural fairness problem as interpretation, implication, restraint of trade, frustration or public policy.
The same point is reinforced by the literature on contractual construction. Catherine Mitchell shows that interpretation is not a mechanical search for dictionary meaning but a contested practice through which courts sometimes police the bargain and allocate contractual power. 148 Gerard McMeel's account of construction likewise emphasises that disputes are often not about semantic ambiguity, but about applying contractual language to unexpected events, especially in long-term contracts. 149 That is exactly the difficulty in Zaha Hadid. The question is not whether the words ‘continue indefinitely’ can linguistically bear a perpetual meaning; they plainly can. The question is whether English law should allow those words to settle, without more, the normative consequences of a relationship that has no fixed end point and no reciprocal mechanism of release.
Nor can the problem be solved by appealing uncritically to the reasonable person. The reasonable person in English construction is a legal fiction designed to secure objectivity, reliance and commercial predictability, but it is not a neutral empirical businessperson; it is an institutional standard whose content is selected by judges. 150 Mayo Moran's critique of the reasonable-person standard is apposite: the standard's apparent neutrality can conceal contestable assumptions about normality, responsibility, power and perspective. 151 In indefinite-contract cases, the danger is acute. A court may present itself as asking what reasonable commercial parties meant, while in reality deciding how far the law should tolerate economic captivity, asymmetric exit rights and the absence of an orderly termination mechanism. 152
Accordingly, the role of substantive fairness in English law should not be overstated. The mere claim of this paper is more modest and more defensible. Substantive imbalance is rarely sufficient by itself; but it becomes legally salient when it reveals a structural failure in the architecture of the relationship, especially where the agreement is indefinite, relational, dependent on continuing cooperation and practically incapable of complete ex ante specification. 153 In such cases, the French model supplies the more coherent rule. It does not ask whether the price was fair, whether one party made a bad bargain, or whether the court sympathises with a disappointed commercial actor. It asks whether the contract purports to bind indefinitely without preserving each party's juridical liberty to withdraw on reasonable notice. 154
The policy conclusion follows. English law need not recognise a general jurisdiction to revise contracts for substantive unfairness. It should, however, recognise – preferably through legislation, and failing that through a narrowly formulated term implied in law – that an indefinite commercial contract is terminable by either party on reasonable notice unless the parties have agreed a valid fixed term or a valid, proportionate and reciprocal termination architecture. Such a rule would protect certainty better than the present position. It would tell parties ex ante what the legal baseline is and would reduce artificial litigation over construction and restraint of trade while preserving the orthodox common law distinction between refusing to rescue parties from bad bargains 155 and refusing to enforce juridical captivity.
Ultimately, public policy and reasonableness formed the decisive fulcrum of the court's reasoning in the Zaha Hadid case. The contested licence agreement was, as the claimant's Counsel argued, unusual and one-sided, 156 binding the Licensee Company indefinitely with no express mechanism for escape. It is almost unthinkable, as a matter of modern legal principle and commercial sensibility, that parties could bind themselves in perpetuity without any exit route. No one can predict the future: productive relationships can sour, and irreconcilable differences may render continued performance commercially untenable. The mere fact that the Licensee Company derived some benefit from the arrangement is frankly irrelevant. Public policy and reasonableness are grounded in objectivity, not subjective gain. Yet the court erred by attaching undue weight to the fact-specific impact on each party, 157 thereby descending into a discussion that, while pragmatic, failed to engage with the more principled question: should perpetuity clauses be legally recognised? The court's stated concern not to critique the bargain reached 158 misunderstands the nature of public policy review, which necessarily entails assessing the implications of contractual terms and whether they accord with societal values. 159 Rather than directly addressing this, the first-instance court's discursive manoeuvring obscured the issue, in effect muddying the waters and clouding the issue. It is certainly disappointing to bring down the issue in rhetoric to the mere wish of the company to escape an unfavourable agreement, given the wider repercussions.
Contrary to what the first-instance court suggested and disagreed with, the public policy test has nothing to do with a qualitative assessment 160 but rather with objective value judgement, common sense and commercial good sense. 161 It is erroneous to reduce the challenge to a party seeking to avoid a ‘bad bargain’, given the broader legal and economic implications of perpetuity. Courts must not overlook the importance of objective commercial reasonableness, informed by experience and a contextual understanding of contract law.
Indeed, in France, commercial matters are often adjudicated by judges drawn from business professions, 162 imbuing their judgments with practical insight absent in a purely doctrinal legal analysis made by judges arising from the advocate profession, who have hardly ever encountered real-life commercial decisions other than vicariously and fail to appreciate the need for companies to reinvent themselves constantly to survive and remain relevant.
In truth, English law cannot afford to cling to dogmas of perpetual obligation. The Zaha Hadid marks were no longer commercially dominant, and the Licensee Company was tied into a deal that arguably had lost mutual benefit. The fact that the agreement was negotiated at arm's length (which this paper rejects as nonsensical for the reasons previously stated), or that Dame Zaha sat on both sides of the transaction, compounds the concern. The issue, fundamentally, is not whether the parties once intended the agreement to be indefinite, but whether that intention should bind them forever in the absence of any termination clause for one of them.
Failing to acknowledge a change of circumstances and the need to restore a certain equity of contract and the full effects of freedom of contract, which necessarily entails freedom from contracts, with or without compensation depending on abuse, fails to acknowledge that intention for indefinite agreement is bound to change and that it may be in the best interests of either party to terminate the agreement and, effectively, enable them to ‘divorce’. This does not involve judicial rewriting of the contract, but the application of terms implied by law to preserve contractual justice. That is, courts may legitimately hold that perpetual agreements are subject to an implied right of termination on reasonable notice, an approach firmly grounded in English precedent. Analogies abound: divorce in family law permits the dissolution of marriage even where benefits still flow. 163 In company law, a fundamental breakdown of trust justifies dissolution of a company or exclusion of a member. 164
Whether the company was incurring any expenditures as a means of justifying an objective approach to reasonableness and restoring balance in the contract 165 is frankly irrelevant. Whether the parties are at arm's length or not, and whatever Hadid's intention, 166 the real issue is whether, as a society, we should enable a person to bind themselves to another forever without the opportunity of escape, even if it means self and mutual destruction. It seems rather esoteric and dogmatic to consider that agreements can never change.
The real issue is whether, where the parties are silent as to termination or only allow it for one of them, the law should recognise the law that the parties made for themselves or ignore it. It is not as much about reading a novel term into the agreement as it is about preventing it from operating and substituting for it a term implied by law enabling termination. This does not involve a rewriting of the agreement as such, but the ignorance of an unlawful term protecting both parties. There is no certainty that the parties would still seek to terminate the agreement with the paralysation of the term. But its recognition has, at least, the effect of restoring balance and putting them on a true equal footing, forcing them to work on their relationship, or at least in theory, to salvage their ‘marriage’.
Divorce, especially where it is contentious and non-consensual, is not without compensation to either party, 167 meaning that the effects of the termination of the relationship can be mitigated, no one being left worse off. It is even more so where the circumstances in which the initial contract was entered into, pace the first-instance court, 168 were strongly arranged if not forced. Whatever agency the other party had was, effectively, limited. Intention might be relevant in determining whether the parties intended for the agreement to run forever. Where it does not or is unclear, it should constitute a first-step test facilitating the striking of the contested clause without modifying the agreement while the parties wish to maintain it.
Where it does, this brings us back to the issue of whether forced relationships should be maintained or whether termination should be allowed with progressive compensation for any loss on the part of the terminating party if they commit any abuse in the termination. Certainty is not boundless and cannot be sacrosanct in the face of individual liberties. Wherever fundamental rights are involved, a true balancing exercise must be undertaken, especially in commercial relationships, between private and public interest. The lack of balance in the relationship may be instructive as to reasonableness and certainly should not just be dismissed as irrelevant or just a complaint as to the nature of the agreement, however bad.
The public interest cannot tolerate contractual straitjackets that jeopardise economic vitality, innovation and fair competition. It is not merely a matter of subjective hardship but of maintaining a viable framework for commercial activity. The lack of balance in the agreement ought not to be dismissed as trivial or irrelevant. It is precisely such imbalances that engage the machinery of public policy review. 169
But in the end, the debate should be elevated to considerations of what might be in the best interest of the majority: that is, whether it is in the interest of society and the economy to maintain an unsustainable relationship that might lead to the individual, even mutual, death of each party, or whether it is more beneficial to enable either one of them to leave the relationship, subject to any compensation, especially if one party thrives off the agreement disproportionately and could possibly continue to do so more equitably if given the time to find another suitable trading partner.
The decision reinforces the view that public policy considerations must account for some degree of fairness and the avoidance of unreasonable burdens, especially in the law of contract. The case illustrates the importance of maintaining a balance between the autonomy of parties and the need for fairness and predictability in contractual relationships, which French law might help calibrate.
Conclusion
There is a strong presumption against perpetual agreements in English law, reflected across various domains such as trusts, family law, employment law and company law. While French law has systematised the unlawfulness of perpetual agreements, reclassifying them as agreements of indefinite duration that either party may terminate (with or without cause, and sometimes with compensation), English law retains a more conservative approach. Termination is permitted only in limited circumstances, which leaves it out of step with the needs of modern commercial practice and with the balance required between flexibility and legal certainty.
Recognising a right for commercial parties to terminate perpetual agreements at any time would not undermine legal certainty. The French experience demonstrates that such a rule does not destabilise commerce. There is no rational basis to think it would do so in England and Wales. Legal certainty should not be wielded as a weapon against commercial good sense, particularly where its rigid application encourages breaches of contract as a means of escape, fosters hardship, and precipitates avoidable business failures with wider societal costs.
It is not in the public interest to allow anyone, let alone commercial actors, to bind themselves in perpetuity and thereby resist the necessary dynamism of commercial life. Over time, once-acceptable terms can become oppressive. The French model, though not flawless, offers a practical blueprint worth replicating. It distinguishes clearly between fixed-term and indefinite agreements and provides safeguards to maintain stability while preserving contractual autonomy, freedom and fundamental liberties. This is achieved through a blend of careful construction and implication, drawing upon a more agile doctrine of interpretation.
For the sake of commercial common sense and awareness, principles frequently taught to law students yet neglected in this case, future decisions should reject the approach in Zaha Hadid Ltd v Zaha Hadid Foundation [2024] EWHC 3325 (Ch) as indeed the Court of Appeal did. Courts should adapt contract law to keep commerce dynamic and avert avoidable future hardship. They should give greater weight to implied terms, reasonableness and good faith in long-term or indefinite obligations. Judicial caution should not stifle development of the law in ways that can accommodate evolving commercial practices while ensuring fairness for all.
In particular, courts should ensure that indefinite contracts contain equitable and reasonable termination rights, whether by statute, implication or express agreement, and that such rights may be subject to:
Compensation for reliance losses where early termination disrupts significant investments made in good faith. Reasonable notice periods allowing the other party to adapt commercially (e.g. six months in supply arrangements or 12 months in distribution agreements). Termination triggers tied to objective criteria, such as material breach, failure to meet minimum performance standards, or significant changes in market conditions. Renegotiation clauses requiring periodic review and adjustment of terms to reflect evolving circumstances, with termination permitted if consensus cannot be reached. Force majeure-style provisions allowing exit where external events fundamentally alter the contract's purpose.
By adopting such safeguards, English law can maintain legal certainty while avoiding the rigid, sometimes oppressive effects of perpetual obligations, ensuring both commercial dynamism and fairness.
Footnotes
Funding
The author received no financial support for the research, authorship, and/or publication of this article.
Declaration of conflicting interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.