The section applies to agreements that do not specify their duration. The basic policy in such cases is that the person making an open-ended commitment should be held to performance over a time that is reasonable in light of the payment and the type of commercial setting, but would typically not be placed in a position of perpetual servitude without a very clear indication that should be the case. The section assumes that there is an agreement. In some cases, a failure to agree on duration will, like failure to agree on any other scope provision, indicate that no contract exists. In addition, the section does not apply simply because a record that documents the agreement is silent.
Agreement refers to the entire bargain of the parties.
This includes oral agreements, trade use, and the entire commercial setting as relevant. This section applies only if the total of all of the circumstances defining the bargain yield no understanding about duration. The Section does not deal with contracts that contain provisions defining their term, even if those terms do not specify a fixed date. The contract terms control. The follows current common law which makes indefinite contracts subject to termination at will on reasonable notice to the other party.