On 2 March 2026 the Privy Council held that about three and a half months was reasonable notice to end a 40-year, unwritten distribution agreement. The decision sets out a purpose-based test, and a list of factors, for fixing notice when a contract says nothing about it.
The case in brief
In Anheuser-Busch International Inc and another v Commonwealth Brewery Ltd [2026] UKPC 8, a Bahamian distributor, Burns House Ltd (BHL), now part of Commonwealth Brewery Ltd, had sold Budweiser and other AB InBev beers since 1975. The deal was an oral contract with Anheuser-Busch International Inc (ABI), later novated to a Dominican Republic company, CND. It was never written down, and it said nothing about how either side could end it (paras 4, 9, 10).
On 12 August 2015 ABI and CND gave about three months’ notice, later extended to 1 December 2015. That made just over three and a half months in all. The letter did not criticise BHL’s performance. It said BHL was owned by a global competitor, Heineken, and that the arrangement no longer fitted AB InBev’s strategy (paras 10, 11).
BHL said reasonable notice was three and a half years, about a month for each year of the relationship. It stopped paying 74 invoices worth $598,511.68, and the suppliers stopped shipping and sued. BHL counterclaimed about $2.4 million for termination without reasonable notice (paras 11–13).
No one disputed that the contract carried an implied term requiring reasonable notice. The only question was how long that notice had to be (para 14).
| Court | Result on notice |
|---|---|
| Supreme Court of the Bahamas (Charles J, 19 May 2022) | 15 months was reasonable |
| Court of Appeal (28 November 2023) | 3 to 6 months was the reasonable range; 3.5 months fell within it |
| Privy Council (2 March 2026) | Appeal dismissed; Court of Appeal’s conclusion stands |
What reasonable notice is for
The Board began with the purpose of a notice period. Without a stated notice period, each party is exposed to the other ending the contract at once. The law implies reasonable notice because both sides would want to be cushioned against that, and neither would want to be tied in for longer than reasonable (paras 20, 23).
The Board adopted the “chief purpose” formulation from the Australian case Crawford Fitting. Notice lets the parties end the relationship in an orderly way. The recipient gets the chance to make substantial progress towards alternative arrangements, and the parties can wind up what the relationship left in progress (para 53).
What notice does not do is protect the recipient from all loss of profit. A business that agrees to an open-ended arrangement without a fixed notice period takes the risk of losing turnover while it replaces the business. The Board called that “a risk of commercial life” (paras 53, 63, 69). A notice long enough to make the recipient whole would often also be impractical, because the recipient would keep staff and resources on the relationship while the other side was stuck in one it wanted to leave (para 53).
Two points on timing:
- Whether a reasonable-notice term is implied is judged on the circumstances when the contract was made (paras 19, 50).
- How long the notice must be is judged on the circumstances when notice is given (paras 25, 54).
The Board also said that a court should treat like cases alike. Decisions on similar distributorships are a useful check on a court’s own assessment (para 66).
The factors, and how much each weighs
The Board listed seven factors. It said a factor counts only to the extent it affects how long the recipient needs to adjust (para 56). Several can pull towards a longer period, but the court must keep in mind that commercial life involves risk and that notice is meant to allow adjustment, not to prevent loss (para 63).
| Factor | What the Board said |
|---|---|
| 1. Formality | A missing written contract matters only indirectly. It shows the parties did not stipulate a notice period, which points against long notice. An established, regular relationship can point the other way. (at para 57) |
| 2. Length of the relationship | Relevant to the extent it shows how significant the business is to the recipient and how well it can adjust. A long relationship that is a small share of turnover needs less adjustment. (at para 58) |
| 3. Significance to the recipient’s business | The Board called this of central importance. A high share of turnover makes adjustment harder. Freedom to sell competing products is relevant here. (at para 59) |
| 4. Resources invested | Money, management and staff committed to the relationship. If staff can be redeployed, the factor carries less weight. (at para 60) |
| 5. Extraordinary expenditure | Spending made specifically for the relationship, with the other side’s knowledge, shortly before termination, that cannot be used elsewhere, may point to longer notice.(at para 61) |
| 6. Other difficulties | For example, commitments to third parties that cannot readily be ended. (at para 62) |
| 7. Continued performance | Both sides must keep performing during the notice period. The longer it runs, the harder that becomes. The Board said this points strongly against long notice. (at para 64) |
The list is not closed. The Board gave market custom and practice, and the time of year when notice is given (if sales peak in part of the year), as further examples (para 65).
How the Board applied them
The Board agreed that the Court of Appeal was entitled to set aside the 15-month finding because the trial judge made errors of law. She took account of an irrelevant consideration and failed to take account of relevant ones (para 68). An appeal court may interfere with a notice period on those grounds, or where the period falls outside the range reasonably open to the judge (para 67).
The irrelevant consideration. The judge fixed 15 months because that was how long BHL’s profits were reduced. The Board called this “the most striking error”. Notice exists to let the recipient adjust, not to preserve its profits (para 69).
Expenditure that was not extraordinary. The judge gave weight to BHL’s dedicated brand manager and staff, but nothing showed this was more than normal spending in a distribution business, or that the staff could not be reassigned. The refrigeration upgrade benefited every refrigerated product BHL handled. AB InBev products were a small share of its turnover, so the upgrade was not extraordinary spending attributable to this agreement (para 70).
Factors that pointed to a shorter period. The judge gave no weight to four points (para 71):
- BHL could sell its own and competing products.
- The agreement produced about 10 per cent of BHL’s turnover, so BHL could adjust more easily than a distributor dependent on one producer.
- ABI wanted to set up a new distributor within a reasonable time.
- Both sides would struggle to stay tied to an arrangement that was ending, and the risk that one of them would “take its foot off the pedal” was greater for ABI because BHL traded in competing products.
Formality. On this point the Board differed from the Court of Appeal. It would not have given as much weight to the absence of a written agreement, which shows only that no fixed notice period was agreed. When the trial judge called the relationship “fixed and formal”, she meant that it was established and stable, and an established relationship of that kind, other things equal, points to longer notice. The Board said this made no difference to the outcome (para 72).
The Board concluded that the balance of factors pointed to a relatively short period, and that the cases on analogous distributorships supported the Court of Appeal’s conclusion (para 73). Those cases, which the Board reviewed at paras 26 to 48, include periods from three months to twelve.
What this means for Singapore businesses
The decision of the Privy Council no longer binds Singapore courts. However its reasoning rests on English and Commonwealth authority on an implied term of the common law, so we would expect it to carry real weight here as persuasive authority.
Our practical points, drawn from the judgment:
- Write the notice period down. The dispute arose because the parties never fixed one. Without an agreed period, the court sets it after the fact, and the Board’s approach favours short periods (paras 20, 57, 73).
- Do not assume a long relationship earns long notice. Length counts only to the extent it shows how much the business matters to the recipient. Forty years produced about three and a half months here (para 58).
- Know what counts as extraordinary. Ordinary staffing and general plant upgrades carried little weight. Spending made for this relationship, with the other side’s knowledge, that cannot be used elsewhere is what may justify longer notice. Keep records of it, and if the investment is large, negotiate a minimum period before you make it (paras 61, 70).
- Share of turnover matters most. A distributor that can sell competing products and depends on the supplier for a small share of revenue should expect a short period (paras 59, 71).
- Plan for the notice period itself. Both sides must keep performing while notice runs, and the longer it runs the harder that is (para 64). BHL’s defence and counterclaim depended on the notice being unreasonable (para 13). Withholding payment on that footing is risky if the court later disagrees.
- Do not expect profits to be protected. Notice cushions the change. It does not make up for the lost business (paras 53, 69).
The Board stressed that each case turns on its own circumstances (para 73). If you are giving or receiving notice to end a distribution, agency or supply arrangement, take advice early on what period is defensible.
Sources
- Anheuser-Busch International Inc and another v Commonwealth Brewery Ltd [2026] UKPC 8, Privy Council Appeal No 0092 of 2024, judgment of Lord Hodge given 2 March 2026 (heard 5 November 2025). Paragraph numbers in this article refer to that judgment.
This article is general information, not legal advice.
