Indefinite does not mean perpetual

The recent Court of Appeal decision in Zaha Hadid Ltd v The Zaha Hadid Foundation has provided important guidance on the distinction between “indefinite” and “perpetual” contracts, while also highlighting the risks that can arise where licence agreements contain unclear duration and termination provisions.

Facts of Case

This case concerned a trade mark licence originally entered into between Dame Zaha Hadid’s architectural practice, Zaha Hadid Limited, and Dame Zaha Hadid herself. Following Dame Zaha Hadid’s passing, the trade marks transferred to The Zaha Hadid Foundation, which became the licensor under the licence.

The licence allowed Zaha Hadid Limited to use the “ZAHA HADID” trade marks in return for a 6% royalty on net income. Notably, the licence had no fixed end date and provided that it would continue indefinitely.

The dispute arose when Zaha Hadid Limited sought to renegotiate the royalty fee and subsequently attempted to terminate the licence by giving reasonable notice. The Foundation disputed this, arguing that the licence would continue indefinitely and that only the Foundation had the right to terminate it.

In 2024, the High Court of Justice held that only the Foundation had the right to terminate the licence. However, Zaha Hadid Limited appealed the decision, arguing that such an interpretation would effectively leave it unable to exit the arrangement.

The Court of Appeal’s Decision

In 2026, the Court of Appeal overturned the High Court’s decision.

A key aspect of the judgment was the Court’s distinction between contracts that are indefinite and those that are genuinely perpetual. The Court confirmed that the two concepts are not synonymous.

The Court explained that an indefinite contract continues for an unspecified period and may end at some point in the future. A perpetual contract, by contrast, is one where the parties have clearly intended the arrangement to continue indefinitely without any inherent right of termination.

The Court applied the two-stage approach derived from Winter Garden Theatre (London) Ltd v Millennium Productions:

Stage One: Where the parties did not have a common intention to create a perpetual contract, the agreement will generally be treated as indefinite duration.

Stage Two: When an agreement lasts for an indefinite duration, a right to terminate on reasonable notice may arise, even if the agreement does not expressly state such a right.

Applying those principles, the Court concluded that the licence was of indefinite duration rather than perpetual duration. Accordingly, Zaha Hadid Limited could terminate the licence on reasonable notice.

Key Commercial Takeaways

When entering into intellectual property licences, it is important to ensure that the licence terms are clear and unambiguous. The decision serves as a reminder that the terms “indefinite” and “perpetual” are not interchangeable.

If the parties intend for a contract to be perpetual, they should expressly state this in the agreement. Likewise, if the intention is for only one party to have termination rights, the drafting should also clearly reflect this. Otherwise, the courts may conclude that a right to terminate exists for both parties.

Why This Matters Commercially

Many businesses continue to operate under long term licence agreements that they negotiated years, or even decades, ago. During that time, market conditions can change significantly, business models may evolve and royalty structures that were once commercially acceptable can become increasingly burdensome.

Examples include:

• Trade mark licence agreements with percentage-based royalty payments;
• Technology and software licensing arrangements;
• Distribution agreements;
• Franchise relationships; and
• Brand licensing and endorsement agreements.

Where contracts contain no clear end date, contain unclear duration provisions or provide termination rights to only one party, businesses should not automatically assume that the arrangement is incapable of being terminated.

The Zaha Hadid decision suggests that, depending on the drafting and surrounding commercial context, there may be scope to argue that a party can bring an ‘indefinite’ agreement to an end on reasonable notice.

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