Key takeaways
A perpetual agreement
This cannot be terminated on reasonable notice unless the contract expressly says so.
Agreement continuing indefinitely
This can be brought to an end at some time in the future on reasonable notice.
Drafting termination provisions
These should be worded precisely to avoid confusion and ambiguity.
Zaha Hadid Ltd -v- The Zaha Hadid Foundation [2026] EWCA Civ 192
This was a dispute arising out of a trademark license agreement and whether the right to terminate the agreement was purely one-sided. However, it is of relevance to commercial contracts generally because the Court of Appeal clarified that an agreement stated to be of ‘indefinite’ duration is not the same as an agreement expressed to be ‘perpetual’.
The background facts
The dispute related to a contract between two organisations set up by the late architect, Dame Zaha Hadid. The claimant, Zaha Hadid Limited (the company), is an architecture practice, founded by Dame Zaha. The defendant, The Zaha Hadid Foundation (the foundation), was set up by Dame Zaha to preserve her work and legacy. Dame Zaha died on 31 March 2016.
The contract is a trademark licence dated 1 May 2013, although it was signed in 2014. At that time, the parties were Dame Zaha herself as licensor and the company as licensee. Dame Zaha held the registered trademarks for ZAHA HADID registered in respect of relevant services. Following her death, the trademarks were transferred to the foundation, which became the licensor and party to the contract.
Under the contract, the company was licensed to use the Zaha Hadid marks in return for a licence fee. The company wished to continue to use the name ZAHA HADID but also wished to renegotiate the terms of the contract, principally because it alleged that the level of licence fee (6% of all net income) was too high. It is worth noting that the licensed services are defined in such a way as to cover any and all services provided by the company (as the licensee) and not limited to services using the trademarks.
The company contended it had the right to terminate the contract on reasonable notice. In March 2024, the company gave 12 months’ notice of termination which the foundation accepted as constituting reasonable notice of termination but denied that the company had any such right to terminate under the contract.
The key provision in the contract was clause 12, entitled ‘Duration and Termination’, which provided as follows:
by clause 12.1, once the agreement had commenced, it would ‘continue indefinitely, unless terminated earlier in accordance with this clause 12’
by clause 12.2, the licensor had a power to terminate without cause on three months' notice
at clause 12.3, a further set of grounds was set out on which the licensor might terminate, including for a material breach as defined in 12.4.
Clause 12 made no express reference to termination by the licensee. Clause 13 dealt with the effect of ‘expiry or termination’, essentially providing that all rights and licences would cease and all outstanding sums payable would fall due.
The High Court decision
At first instance, the judge found in the foundation’s favour, concluding that the contract contained no term giving the company the right to terminate on reasonable notice and it was, therefore, effectively locked into the contract indefinitely. The judge’s reasoning was as follows:
the terms of the contract as a whole and aspects of the wider context supported the conclusion that the licensor should have wide powers of termination, and the licensee should have none
the words of clause 12 reinforced that conclusion because they only referred to termination exercisable by the licensor
the word ‘indefinitely’ and an agreement of indefinite duration did not automatically include a right to terminate on reasonable notice. What the parties plainly meant was that the contract would continue unless the licensor terminated it
the words ‘unless terminated earlier in accordance with this clause 12’ showed that the express termination rights given to the licensor by the clause were the only means by which the contract could be terminated
the wider factual matrix supported this conclusion because Dame Zaha would eventually relinquish control of the company and the agreement was intended to provide her with an income for her lifetime. It made sense that she would want to retain a mechanism of control over the very valuable trademarks, such as a unilateral right to terminate.
The company appealed.
The Court of Appeal decision
The Court of Appeal allowed the appeal.
The Court of Appeal distinguished between a contract that was intended to be ‘perpetual’ and one that was intended to be ‘indefinite’.
A truly perpetual agreement could not be terminated on reasonable notice absent express terms. By contrast, an agreement of indefinite duration contemplates that it could be brought to an end at some unspecified time in the future, whether as an implied term or following directly from the true construction of the agreement.
In the Court of Appeal’s view, the High Court judge was wrong to conclude that the contract as a whole and the wider commercial context supported the idea that only the licensor would have the power to terminate the contract and not the licensee.
It was true that Dame Zaha, as trademark owner, would wish to exercise close control of the manner of exploitation of those trademarks, but the terms of any trademark license could appear one-sided, that was simply a reflection of the subject matter. It did not support an inference either way about termination provisions.
Trademark licences were simply one kind of commercial relationship and there could be no presumptions either way. Indeed, it would not be expected that commercial parties would wish to lock each other into a relationship in perpetuity. It was common ground that Dame Zaha had intended other architects at the company to have equity in due course, making the company an independent professional practice and that militated against a perpetual license.
The Court of Appeal concluded that, as a matter of the construction of the parties' intentions revealed by the words used, and the circumstances, the parties intended the contract to last for an indefinite period and not to be perpetual in nature from either side's point of view. To fulfil that construction of their intention, a power to terminate at the behest of either party on reasonable notice should be inferred. The express terms of the contract were not inconsistent with such a power.
Comment
The case is a reminder to draft contractual terms, including termination provisions, with precision:
if the intention is that an agreement is perpetual (or terminable only by one party), say so expressly and consider stating that there is no right for the other party to terminate on reasonable notice
if the agreement is intended to run without a fixed end date but not forever, include an express termination mechanism (e.g., termination on notice by either party) and specify what constitutes reasonable notice
avoid relying on words like indefinitely without clearly spelling out how the relationship can end. Any ambiguity will be resolved by construction in light of the commercial context which can produce uncertain outcomes and increase the risk of dispute.
Drafters of termination provisions should consider carefully the wording used to ensure the parties’ intentions are accurately reflected and expressly stated.
