What is Indefinite-Term Contract?

An indefinite-term contract runs until either party decides to end it. There is no automatic expiry date, no renewal cycle, and no minimum commitment unless one is explicitly included. The contract simply continues, month after month or year after year, until someone gives notice.

This structure offers flexibility but also creates risk. The main advantage for both parties is continuity without the administrative overhead of periodic renewal. A hospitality business with a linen supply contract on indefinite terms does not need to renegotiate every year. The supplier has a stable revenue stream; the buyer has uninterrupted service.

The risk sits in the termination provisions. Dutch law recognises that indefinite-term contracts can generally be terminated by either party with reasonable notice, even if the contract does not include a termination clause. However, what counts as "reasonable" depends on the circumstances: the duration of the relationship, the investments made, the dependency created, and the availability of alternatives. A court might require six months' notice for a relationship that has lasted ten years, but only one month for a new arrangement.

Many indefinite-term contracts include a minimum duration at the start. For example, a SaaS agreement might run indefinitely but with a 12-month minimum commitment. During that initial period, the termination rules of a fixed-term contract apply. After the minimum period, the contract converts to a true indefinite arrangement with monthly or quarterly notice periods.

The interaction with pricing is worth noting. Suppliers on indefinite contracts sometimes include annual price adjustment clauses tied to CPI or another index. Without such a clause, the original price applies indefinitely, which may benefit the buyer but can create tension if costs rise significantly. A catering supplier locked into 2023 pricing on an indefinite contract will eventually need to renegotiate or face margin erosion.

For SMBs, the critical question is always: how do I get out of this if I need to? An indefinite contract without a clear notice period or exit mechanism can be more restrictive than a fixed-term agreement.

Indefinite-term contracts often receive less scrutiny than fixed-term agreements because there is no pressing deadline. This creates a false sense of security. According to Weshare (2025), 95% of organisations lack full visibility into their contractual obligations, and indefinite contracts are the easiest to lose track of because they never trigger a renewal reminder. Without active monitoring, businesses discover they are paying above-market rates for services they could renegotiate or replace, but only if they know the contract exists and understand its termination terms.