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Nevada Supreme Court Upholds Written Contract for a “Perpetual” Duration

Volume 3, Issue 11
August 4, 2004

In a non-employment case, the Nevada Supreme Court considered the enforceability of a contract that had a perpetual duration clause. At issue was the validity of a written agreement requiring a real estate company to pay royalties to certain individuals who functioned as a staffing company advertising for and securing potential employees for the real estate company. Pursuant to the agreement, the individuals would be paid $50.00 for each person referred to and hired by the real estate company. The term of the agreement was "perpetual or until terminated by mutual consent [of] all parties". The trial court concluded that the perpetual duration clause in the agreement did not provide a legally sufficient duration. Following a jury trial, the court entered judgment against the real estate company, which had ceased paying the royalties pursuant to the agreement. On appeal, the Nevada Supreme Court held that perpetual duration clauses in contracts are valid as a matter of law.

This case serves as a reminder of the need to take great care in drafting the terms of contracts as provisions indicating "perpetual" or "lifetime" obligations are enforceable in Nevada. This is true even for employment contracts. While the Nevada Supreme Court has ruled that uncorroborated oral promises of lifetime employment do not serve as the basis to overcome the presumption of at-will employment, see Yeager v. Harrah's Club, Inc., 111 Nev. 830, 834-36 (1995), it has also held that employment contracts specifically providing for lifetime or permanent employment are valid and enforceable. See Shoen v. Amerco, Inc., 111 Nev. 735, 742-43 (1995).

Bell v. Leven, 120 Nev. Adv. Op. No. 43 (June 11, 2004).

Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.