Court of Appeal rules on implied right to terminate an indefinite licence agreement on reasonable notice

Zaha Hadid Limited v The Zaha Hadid Foundation [2026] EWCA Civ 192

The question

Can a long term agreement, such as a trade mark licence, with no express limit on duration and a unilateral termination clause in favour of one party, be terminable by either party on reasonable notice?

The key takeaway

Indefinite is not synonymous with perpetual. Where parties intend for a contract to last for an indefinite period (and not in perpetuity), unless there is clear wording to the contrary, the courts may infer a right for either party to terminate on reasonable notice, if the true construction of the agreement provides for this.

The background

Dame Zaha Hadid and then on her death, the Zaha Hadid Foundation (the Foundation), licensed various trade marks to Zaha Hadid Limited (the Company).  The Foundation's purpose was to preserve Dame Zaha's work as a renowned architect and the Company was set up to carry out architectural projects.

The trade mark licence, which was of indefinite length, contained a duration and termination clause providing for termination rights solely in favour of the Foundation as licensor.

"12. DURATION AND TERMINATION

12.1 This agreement shall commence on the Effective Date and shall continue indefinitely, unless terminated earlier in accordance with this clause 12.

12.2 The Licensor shall have the right to terminate this agreement on giving the Licensee not less than 3 months' written notice of termination.

[12.3: a termination for breach clause, solely in favour of the Licensor]

The arrangement operated without major issue for a number of years until, in March 2024, relations deteriorated when the Company, seeking to renegotiate the royalty (which it argued was too high), served twelve months' written notice to terminate the licence.  The Foundation denied that the Company was entitled to serve a termination notice.

The key issues for the court to consider were whether: (1) clause 12.1 should be construed as including a right by either party to terminate the licence on reasonable notice, in addition to the express rights of termination conferred on the Foundation (as licensor) under Clauses 12.2 and 12.3; and (2) whether the agreement as a whole was unlawful as it operated in restraint of trade.

In its December 2024 judgment, the High Court found for the Foundation on both points. The Company had no contractual right to terminate, and that position did not offend the restraint of trade doctrine.  The Company was, in effect, bound by the contract forever. The Company appealed to the Court of Appeal on both issues.

The decision

In a unanimous decision, the Court of Appeal overturned the decision of the High Court, holding that "indefinitely" and "in perpetuity" are not synonymous terms; a licence expressed to continue indefinitely does not bind the parties forever.

The court referred to a series of authorities governing contracts of indefinite duration and followed the two-stage test first developed by the House of Lords in Winter Garden Theatre v Millenium Productions [1948]:

1. As a matter of construction, what was the parties’ common intention as to the duration of the contract? In other words, did the parties intend (in all or defined circumstances) the agreement to run forever, or merely for an indefinite period?
2. If the latter, then to give effect to this common intention that the agreement is of indefinite duration for both parties, all parties had to have the ability to bring it to an end – i.e. to terminate on reasonable notice either as a matter of interpretation or as a “kind of implied term”.

Applying that framework to the circumstances of the case, the Court held that the word "indefinitely" meant what it said. An agreement of indefinite duration necessarily contemplates that it can be brought to an end at some unspecified future time; a perpetual agreement does not. Having passed the first hurdle, the Court then held that the presence of express termination rights in favour of the Foundation only was not inconsistent with an additional right of either party to terminate on reasonable notice. Indeed, a power to terminate on reasonable notice "follow[ed] directly from the true construction of the agreement". The Company’s appeal was subsequently granted.

Having found for the Company on construction, the Court declined to rule on the restraint of trade grounds, holding that the questions raised were better left to a case in which they would be determinative.

An application for permission to appeal to the Supreme Court was lodged on 22 April 2026.

Why is this important?

For now, the decision settles that "indefinite" and "perpetual" are not interchangeable in a commercial licence, and that a party may terminate on reasonable notice even where no express termination rights exist in its favour.

With a Supreme Court application lodged, however, the final word on this point may be yet to come.

Any practical tips?

Review existing agreements – considering that existing agreements expressed to continue "indefinitely", may provide credible grounds to terminate on reasonable notice, even where the contract's express termination rights run only in one party's favour.

Where parties are intending an agreement to bind the parties permanently, "indefinitely" alone may not be sufficient. Clear language, such as "in perpetuity" coupled with express exclusion of any implied (or similar) rights to terminate on notice, should be used. Ensure that the true intention of the parties is reflected in the agreement and that tying the parties in, in perpetuity, makes commercial sense on the facts. 

If one party is not being granted the right to terminate then provide for this expressly.

Summer 2026