How Much Notice Do You Have to Give to End a Long Contract? Lessons from a 40-Year Beer Deal

Many small businesses run at least one important relationship on trust. A supplier, a distributor or a customer you have worked with for years, where the terms were never fully written down. It works, until one side wants out. Then the argument starts: how much warning do they have to give you, or you them?

The Privy Council has now given its clearest answer yet, in Anheuser-Busch International Inc v Commonwealth Brewery Ltd [2026] UKPC 8. The appeal came from the Bahamas, but the Board relied heavily on English cases, and the guidance is directly relevant to UK businesses.

The deal that was never written down

In 1975, a Bahamian distributor agreed, orally, to distribute Anheuser-Busch's beers, including Budweiser, in the Bahamas. The arrangement ran for about 40 years. It was never reduced to a formal written contract, and the distributor remained free to sell competing products. By 2015 the beer brands involved made up only about 10% of the distributor's turnover.

In 2015 the supplier ended the arrangement, giving just over three and a half months' notice. The distributor argued that fair notice was three and a half years, roughly a month for every year of the relationship, and withheld about $598,000 in unpaid invoices to press the point.

Three courts, three answers

The Bahamian trial judge thought 15 months was reasonable, largely because that was how long the distributor took to win replacement business. The Court of Appeal disagreed: a reasonable range was three to six months, so the notice given was enough. The Privy Council unanimously agreed with the Court of Appeal.

What notice is actually for

The heart of the decision is a simple point about purpose. Reasonable notice exists to let the relationship end in an orderly way, and to give the receiving side a real opportunity to make substantial progress towards new arrangements. It is not there to protect the recipient's profits while it rebuilds. Losing some turnover while you adjust is, in the courts' view, a risk of commercial life, especially if you never negotiated a fixed notice period in the first place.

The trial judge's focus on how long the distributor's profits took to recover was the key error. The question is not "how long until you are whole again?" but "how long do you reasonably need to wind things down and find your feet?"

The Board also pointed out that notice cuts both ways. During the notice period each side must keep performing a contract that one of them has already decided to leave. A very long period ties the departing party to a relationship it wants to end, and can tempt the other side to take its foot off the pedal.

The factors a court will weigh

The Board drew together a list of considerations from the case law. None is decisive on its own, and each matters only so far as it affects the recipient's ability to adjust:

- **No agreed notice period.** If the parties chose not to fix one in writing, that points against a long implied period. You had the chance to protect yourself and did not take it.

- **Length of the relationship.** Relevant, but only as a guide to how hard adjustment will be. Forty years of a small account may matter less than five years of your biggest one.

- **Share of your business.** The factor of "central importance". If the relationship supplies a large slice of your turnover, you need longer to adjust. Here it was about 10%, so adjustment was easier.

- **People and resources committed.** A few staff who can be redeployed point to shorter notice; a large dedicated team points to longer.

- **Extraordinary spending.** Special investment made with the other side's knowledge, not yet recouped, can justify more time. Ordinary running costs cannot.

- **Commitments to others.** Contracts with third parties that cannot easily be unwound may justify longer.

- **Keeping up performance.** Both sides must perform during notice, and the longer the period the harder that is. This weighs strongly against lengthy notice.

Market custom, and even the time of year in a seasonal trade, can also play a part.

What this means for your contracts

The practical lesson is not really about litigation. It is that nobody in this dispute ever agreed a notice clause, so a court had to invent one, expensively, three times over.

A few steps remove most of the risk:

- **Put a notice clause in writing.** For any ongoing supply, distribution, agency or service arrangement, agree how either side can end it and how much notice is required. Three months is common; the right number depends on how dependent each side is.

- **Look at your informal arrangements first.** The longer and looser the relationship, the more a court will fill the gaps, and not necessarily in your favour.

- **Check which side you are on.** If you depend heavily on one customer or supplier, a short notice period is a bigger risk to you than to them. That is the clause to negotiate before you need it.

- **Do not assume loyalty earns time.** Length of relationship helps, but it does not buy you a month of notice per year. The court asked what the distributor needed to adjust, not what felt fair after 40 years.

Ending arrangements well is part of running a growing business, just as much as winning them. A short review of your main contracts, checking that each says how it ends, is far cheaper than finding out the answer in court.

This article is general information, not legal advice for your situation.