LEGAL PRINCIPLE: CONTRACT LAW – Termination of Indefinite Contract – Implication of Reasonable Notice for Contracts of Indefinite Duration

This principle addresses contracts silent on duration and termination, establishing default rules that balance the interests of both parties. Where parties enter into continuing relationships (employment, consultancy, agency, etc.) without specifying how long the relationship will last or how it may end, the law does not leave them in legal limbo. Rather, it implies three terms: (1) the contract is of indefinite duration, not for any fixed term; (2) either party may terminate the contract; and (3) termination requires giving reasonable notice to the other party. “Reasonable notice” is determined by considering: the nature of the position, industry custom, length of service, remuneration period (weekly, monthly, annually), seniority, and circumstances. The implication of these terms reflects fundamental principles: contracts should not create perpetual obligations impossible to escape; neither party should be trapped in an unwanted relationship indefinitely; yet parties should not be subject to arbitrary termination without opportunity to make alternative arrangements. The reasonable notice requirement protects both parties: it allows the terminating party to exit the relationship while giving the other party time to adjust (find alternative employment, replace the consultant, etc.). This implied term can be excluded by express contrary provision—if parties want different termination rules, they must contract for them explicitly. The principle applies broadly to various continuing contractual relationships characterized by ongoing performance rather than single transactions. It provides certainty and fairness in situations where parties failed to address termination, ensuring that business relationships can be concluded in an orderly manner with mutual respect for reasonable transition periods.