Businesses enter into contracts with no defined end date all the time. Usually, that is because nobody is thinking about the end of the relationship when the agreement is signed. At the beginning of a new commercial arrangement, the focus is on opportunities, growth and getting the deal done. Questions about how either party might eventually exit tend to receive far less attention. The issue only becomes important years later when circumstances change and one party wants out.
At that point, a common assumption often emerges: if the contract does not say how it can be terminated, surely the law allows a party to bring it to an end by giving reasonable notice.
A recent Queensland Court of Appeal decision suggests businesses should be cautious about relying on that assumption.
The dispute
In Impact Healthcare Pty Ltd v St Vincent’s Private Hospitals Ltd [2026] QCA 21, the Court considered an agreement entered into in 2000 under which Impact Healthcare agreed to manage and operate an emergency centre at a newly constructed private hospital. Significantly, the agreement contained no fixed end date.
Almost twenty years later, St Vincent’s Private Hospitals acquired the agreement and sought to terminate it. Its position was that the Court should imply a term allowing either party to terminate the agreement on reasonable notice. Impact Healthcare disagreed and argued that no such right existed.
The dispute ultimately reached the Queensland Court of Appeal.
The argument that nearly succeeded
What makes the decision particularly interesting is that St Vincent’s succeeded at first instance. The trial judge found that a right to terminate on reasonable notice could be implied. The reasoning was that commercial contracts of indefinite duration should not leave parties trapped indefinitely and that such a term was necessary to make the agreement work commercially.
That is a view many commercial people would instinctively understand. If a contract has no expiry date and no apparent means of exit, it is easy to see why one might think a termination right should exist. The Court of Appeal, however, took a different view.
What the Court of Appeal decided
The Court rejected the argument that there is a general rule applying to all commercial contracts of indefinite duration. According to the Court, the category is simply too broad.
Commercial contracts come in many different forms and serve many different purposes. An open-ended management agreement is different from a franchise agreement. A franchise agreement is different from a supply agreement. A supply agreement is different from a joint venture. Because the category is so diverse, the Court could not identify a characteristic common to every indefinite commercial contract that would justify automatically implying a right of termination.
The Court also focused on the actual terms of the agreement before it. Importantly, the parties had already addressed termination. The contract contained specific provisions identifying circumstances in which the agreement could be brought to an end. The parties had therefore turned their minds to the question of termination and made deliberate choices about when termination would be permitted.
That was an important consideration. The Court found that implying a broader right to terminate would not be filling a gap in the contract. It would effectively alter the bargain the parties had agreed to.
The BP Refinery analysis
The decision is also a useful reminder of the limits of implied terms generally. Courts do not imply terms merely because they appear fair, reasonable or commercially attractive in hindsight.
The question is whether the proposed term satisfies the established principles for implication, often referred to as the BP Refinery criteria. In this case, the Court found that the proposed right to terminate on reasonable notice failed for several reasons:
- it was not necessary to give the contract business efficacy;
- it was not so obvious that it went without saying; and
- it was inconsistent with the express termination provisions already included in the agreement.
In short, the proposed term did not complete the contract. It contradicted it.
Why the decision matters
The significance of the decision extends well beyond the healthcare sector.
Many businesses have long-standing agreements that have continued for years without review. Some have no fixed term. Others contain very limited termination rights that seemed acceptable when the relationship began but now feel restrictive. This decision is a reminder that a court may not provide an exit simply because one party has decided the arrangement no longer suits its commercial interests.
Courts generally enforce contracts according to the terms the parties agreed upon. They do not rewrite agreements because one side later wishes it had negotiated something different. That principle becomes particularly important where the parties have already addressed a topic in the contract. If a contract contains carefully drafted termination provisions, a court is likely to treat those provisions as a deliberate allocation of risk rather than a gap requiring judicial intervention.
Practical lessons for businesses
There are several practical takeaways from the decision.
First, termination clauses deserve more attention than they often receive during negotiations. They may appear routine at the outset, but they frequently become some of the most important provisions in the agreement when a relationship breaks down.
Secondly, businesses should not assume that an implied term will rescue them from an unfavourable bargain. The threshold for implying terms remains high, and this decision demonstrates that courts will not readily intervene where the parties have already dealt with the relevant issue themselves.
Finally, it is worth reviewing existing long-term and open-ended agreements. A careful review may reveal that the business has fewer options than expected if it wishes to exit the arrangement. Equally, it may reveal that the business enjoys stronger contractual protections than it had appreciated.
If you have an open-ended contract and are unsure where you stand, get in touch with the team at O’Sullivan Sneddon Law. We are always happy to have a chat.
