How can I change a yearly referral agreement into one that lasts forever?

A "perpetual" agreement simply means the contract keeps going without a set end date. In fact, some states — such as California and New York — interpret perpetual obligations narrowly unless the contract clearly states that it is intended to continue indefinitely and includes a defined termination clause. If the agreement is vague, a court may decide that either party can walk away with reasonable notice. That's why careful wording is key.

Here are a few areas to focus on when updating your agreement:

• Duration clause: State that the agreement continues indefinitely unless ended under specific conditions.
• Termination clause: Spell out how either side can exit — for example, if one party breaches the contract, goes out of business, or provides written notice within a set timeframe.
• Renewal language: Remove or replace any wording that refers to annual renewals so the perpetual term is clear.

Having all parties sign the updated agreement can help confirm that everyone understands and agrees to the new terms.

What to consider in your specific situation

While these guidelines apply to many businesses, your situation could be different. The right path forward depends on the details of your contract and the needs of your business. Factors to consider include:

• The type of agreement (referral, service, vendor, etc.) and what obligations are involved.
• The exact language currently in your contract, including renewal and termination clauses.
• Which state's laws apply to your agreement and how they treat perpetual contracts.
• The size, structure, and goals of your business and your referral partner's business.
• How much risk or flexibility you and the other party are comfortable with.

Because every business setup is different, it can help to learn more about how these rules apply to your specific situation. You can ask your own question in Rocket Copilot to get legal information about updating your agreement, or connect with a Legal Pro to learn more about your options.