A court of law may uphold a perpetuity.
Most business transactions are sealed with a written contract agreement. Sometimes the contract includes a perpetuity clause, which upholds the conditions or services of the contract for an indefinite period of time. Such agreements should only be signed if you are prepared to abide by the contract's stipulations in perpetuity.
Timeshares
Timeshare agreements usually included a perpetuity clause. In the context of a timeshare, a perpetuity clause allows for perpetual ownership of the timeshare, such that it can be directly passed onto future generations of family members. This also means that the maintenance charges associated with the property become the responsibility of the property owner for an indefinite period of time. As a result, selling your timeshare property is usually the only way to get out of a timeshare perpetuity.
Service Contracts
Legally, a perpetuity clause can be attached to almost any type of contract, including a service agreement. If, for example, a food supplier enters into a perpetuity agreement with a grocery store, the supplier is by definition agreeing to deliver or otherwise supply the grocer per the conditions of the agreement for an indefinite amount of time. If both parties agree to termination, or one business ceases to operate, the agreement may be terminable.
Court Rulings
The concept of an agreement that literally lasts forever is often difficult to grasp in its entirety. In 2000, a UK court ruled that even though Harbinger UK Ltd. had requested the termination of a software licensing agreement with its client GE Information Services Ltd., which GE agreed to, it was still responsible for providing software support to any customers using the software. As a result, there is no specific date when Harbinger UK Ltd. can stop providing service.
Considerations
Because most contracts do not contain a perpetuity clause, a business or individual may enter such an agreement without a full understanding of the potential consequences. You should always consult an attorney to review the contents of any perpetuity agreement before you sign one. If you are not prepared to uphold the services or conditions of a perpetuity agreement in full, and for an indefinite amount of time, you should not sign this type of contract.
