In a business contract, does the following statement :

"This provision survives the termination of this Agreement."

Means that the provision survives for a unlimited amount of time? Is there a legal limit to this? Isn't it abusive? If yes, can this be legally enforced?

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    You haven't specified a jurisdiction, so I've supplied a general answer. If you supply a jurisdiction, the stack-exchange can provide a more specific answer.
    – sharur
    Aug 7 '18 at 22:57
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    Even with a jurisdiction this question is impossible to answer meaningfully. Some provisions that survive termination of the Agreement should appropriately last for an unlimited amount of time, others are subject to a statute of limitations or the laches doctrine, that serves as a gloss on the contract language. Without knowing the nature of the provision and the context of the transaction, it is not answerable even in principle, even if you know the jurisdiction. Law is not physics. It is not governed by general principles that apply in all circumstances. It is highly context specific.
    – ohwilleke
    Aug 8 '18 at 3:04
  • Is that part of a confidentiality agreement?
    – Mast
    Aug 8 '18 at 6:47
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    @Mast - It's a relatively common clause used in (typically) non-compete contracts to prevent people poaching staff or sharing corporate secrets; google.co.uk/…. It's known as a "survival clause".
    – Richard
    Aug 8 '18 at 6:51

Jurisdiction has not been provided, so I've written a general answer:

  1. Not necessarily; often, such provisions clauses will have their own expiration dates, for example "for five years after signing, X", with X still being valid after cancellation up to 5 years(so if you cancel after 3 years, X is still valid for 2 more years), or "for two years after cancellations, Y"(especially common with non-compete clauses) where the time-limit of Y starts when the contract is cancelled.

    Other clauses are meant to indeed be enforced forever, such as some non-disclosure, non-disparagement, or indemnity clauses. For example, an indemnity clause in a contract that prevents a party from suing the counter-party for work done under the contract would be pointless if it could be bypassed by a party terminating the agreement.

  2. There are lots of legal limits, based on the terms of the provision, and its nature, all governed by the contract law of the jurisdiction under which the contract was drafted under and/or is governed by (this is generally obvious, except for some cross-border contracts, which generally will have a declaration as to whose laws apply).

  3. It is not inherently abusive, but can certainly be abused. What is considered abusive often varies from jurisdiction to jurisdiction (not only on this issue, but on legal issues in general).

  4. It depends on the jurisdiction, and generally on the terms of the provision itself. If the court asked to enforce the terms of the agreement feels that the provision is illegal or abusive, they won't be enforced (and possibly the entire document declared null and void, depending on the central-ness of the illegal or abusive provision; some provisions specifically state that invaliding the provision doesn't invalidate the whole contract to try to prevent this). If they don't feel the provision is illegal or abusive, they will generally enforce it.


provision survives for a unlimited amount of time ?

Yes, that's what it means, unless other portions of the contract support a reasonable interpretation that the validity thereof is time-limited.

Is there a legal limit to this ?

Under U.S. contract law, there is no limit for a business context. I highly doubt that other countries applying similar principles of contract law (for instance, some or perhaps many European countries) would enact a time limit for business contracts.

Isn't it abusive ? If yes, can this be legally enforced ?

Being abusive and/or enforceable largely depends on what exactly is agreed upon. The more unreasonable the clause as applied to that particular [legal and factual] context, the unlikelier it is for the clause to withstand judicial review.

Generally speaking, the fact that a person knowingly and willfully consented to a clause in a contract makes it very hard to strike or reverse that clause in court. Therefore, it is extremely important not to sign a contract that contains clauses which since its inception (that is, inception of the contract) you deem abusive.

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    "Under U.S. contract law, there is no limit for a business context." Not entirely true. Some terms will be spent by their own language. Laches and statutes of limitations and non-claim statutes provide other time limits in many contexts. The rule against perpetuities could also apply in many contexts.
    – ohwilleke
    Aug 8 '18 at 3:06
  • @ohwilleke You are confusing concepts. Laches and statutes of limitations relate to the plaintiff's delay in seeking enforcement of a contract. At most, laches also encompasses a change of conditions that renders contract enforcement inequitable. But that doesn't mean that statutes/doctrines will limit for how long a clause governs the parties' agreed conduct. At least in a business context (per OP's inquiry), it is entirely up to the parties to determine the time-limit of a clause. Claims of breach of contract may accrue at any time if its provision establishes unlimited survival. Aug 8 '18 at 10:22
  • They could, but in many circumstances they wouldn't. There are a variety of limiting principles. Laches often would limit enforcement without regard to when a breach happened. The Rule against Perpetuities would also often apply.
    – ohwilleke
    Aug 9 '18 at 4:32
  • @ohwilleke "Laches often would limit enforcement without regard to when a breach happened." Again, because the doctrine of laches relates to an unforeseen change of conditions or an enforcement that has been sought too late. But laches by itself does not override the parties' agreed intent of contract's unlimited survival. To bring up laches here, one needs to speculate heavily about OP's concern. Likewise, the Rule against Perpetuities relates to the conveyance of real & personal property, and thus is unlikely to bear any relevance to OP's [business context] inquiry or to my answer. Aug 9 '18 at 10:48

Though amusing, there is a reasonable scenario for this language. Suppose the main contract is for one party to buy items from the other at some rate and price. It is recognized that business conditions might change, so one or the other would not want to continue the contract. There could be conditions where one party could terminate the contract, perhaps with the payment of some penalty. The provisions referred to could be protection of intellectual property, use of trademarks, or some such. Even if the purchase agreement is terminated the parties could want to keep these protections as a default. Presumably they could agree to amend the section referred to, but the idea is that terminating the sales part does not terminate the IP agreements.

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