Update (June 8, 2018): Minnesota Litigator is proud of its accurate predictions but we also own our botched predictions. We got a recent prediction way wrong.
In Glacial Plains Co-op v. Chippewa Valley Ethanol Company, the primary case described in earlier posts, below, the issue was whether a contract that expressly provided that it had “indefinite” duration should be construed as being a contract without any end time (i.e., a perpetual contract) or whether it should be deemed “terminable by either party after a reasonable amount of time.”
The Court continued, “the use of the word ‘indefinitely’ creates uncertainty as to whether the contract is meant to be of indefinite duration or perpetual duration.” Because of the policy against perpetual duration and the view that the language in the contract was ambiguous, the Court found that the contract that provided expressly for an indefinite duration could be terminated by either side “after a reasonable period of time.”
(Though we predicted the decision wrong, we think the decision is right, though a bit confusing as written. We’d propose a slight revision, “the use of the word ‘indefinitely’ creates uncertainty as to whether the temporal term of the contract is (a) ‘infinite,’ that is, intending no end-date ever, or (b) ‘undefined,’ that is, not including an end-date but not foreclosing one either.”)
Finding the contract terminable after a reasonable amount of time, the next question was what’s “a reasonable amount of time”?
The Supreme Court dodged answered that question: “A ‘reasonable time’ is determined…by the individualized circumstances surrounding each case.” So good luck figuring that out. Best to avoid the issue by hashing out a term of a contract or making it crystal clear that the parties intend for the contract to have no end date ever.
Practice pointer: Although the Minnesota Supreme Court went out of its way to say that it is not requiring the use of a “magic word” — PERPETUAL — you probably want to use such a word if you are drafting an agreement that you wish to have no end.
If you simply agree, “I will pay you $X and, in return, you shall permit me to do/to use something ‘indefinitely,'” your days might very well be numbered.