Contract Without Duration In California
Consolidated Theatres, Inc. v. Theatrical Stage Employees Union (1968) discussed the consequences of a contract having neither an express nor an implied term of duration.
When there is no express term, and the surrounding circumstances and the nature of the contract do not permit the construction of the contract to have an ascertainable term of duration, the contract is usually construed as terminable at will after a reasonable time of duration has elapsed. (Consolidated Theatres, Inc. v. Theatrical Stage Employees Union, supra, 69 Cal. 2d at pp. 727-728.)
Thus, Consolidated Theatres establishes a three-step analysis of contractual terms of duration.
The court first seeks an express term. If one is absent, the court determines whether one can be implied from the nature and circumstances of the contract. If neither an express nor an implied term can be found, the court will generally construe the contract as terminable at will. ( Id. at p. 727.)
The courts of New York have repeatedly approved contracts with express indefinite terms of duration, and have "had no difficulty in approving contracts made to last through the life of one of the parties." (Ehrenworth v. George F. Stuhmer & Co. (1920) 229 N.Y. 210 [128 N.E. 108, 110]; accord, Ketcham v. Hall Syndicate, Inc. (1962) 37 Misc.2d 693 [236 N.Y.S.2d 206, 212], affd. (1963) 19 A.D.2d 611 [242 N.Y.S.2d 182]; see Payroll Exp. Corp. v. Aetna Cas. and Sur. Co. (2d Cir. 1981) 659 F.2d 285, 291-292 [noting New York law approves distribution agreements providing for termination on the occurrence of listed events];
See also Faruki, the Defense of Terminated Dealer Litigation: a Survey of Legal and Strategic Considerations (1985) 46 Ohio St. L.J. 925, 928, fn. 8.)