Wells Equipment Ltd (WEL) and Paterson Construction Ltd (PCL) are parties to a license agreement. The terms of the agreement grant WEL the rights to import into New Zealand certain patented construction products, the exclusive right to sell such products in New Zealand and the exclusive rights to use certain trademarks. The agreement was entered into in 2016. The agreement includes an express clause that provides either party can terminate the contract for breach, but there was no general termination clause.

PCL now wants to terminate the agreement as it intends to import the construction products into New Zealand directly. WEL argues that PCL has no right to terminate the agreement in the absence of a breach of a contract.

However, PCL considers that there is an implied term that allows it to give reasonable notice terminating the agreement and that it is commercial nonsense to suggest that the parties intended to contract forever.

Required:

Apply the test in BP Refinery Western Port v Shire of Hastings (1977) 180 CLR 266 (PC) to determine whether it was an implied term of the contract that PCL could terminate the agreement on reasonable notice.