Many California contracts, such as commercial leases, have specific end dates that bind both parties to the terms. On the other hand, perpetual contracts do not have an expressed duration. If there is any uncertainty as to whether the contract is perpetual, you and the other party could end up in court over whether terminating the contract is a breach.
According to the Association of Business Trial Lawyers Report, when there is a question of duration, the California courts generally seek to avoid ruling that any given contract is perpetual in nature. In fact, unless the contract specifically states that it is perpetual, the court is likely to apply a three-step process to identify possible duration or set an end date.
- Express term of duration
Courts look for language or clauses that indicate that the services or goods that you or the other party provide have a set number of performances or a set quantity. This would mean the contract is not indefinite, even no specific date is listed.
- Intention of duration
An oral agreement or other circumstances involved in the creation of the contract may imply that you or the other party had an intent as to the duration. Whatever extrinsic evidence either party provides must not conflict with any of the terms of the contract.
- Reasonable time of duration
Although reasonableness often seems like a nebulous legal term, the court may prefer to allow either party to give what it deems to be reasonable notice for the ending of the contract. The court may also set a reasonable time limit for the duration of the contract.
This general information about contracts without express end dates is provided for educational purposes only and should not be construed as legal advice.