diff --git a/Tests/AckGenTests/DuplicateLicenseFileTests.swift b/Tests/AckGenTests/DuplicateLicenseFileTests.swift
new file mode 100644
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--- /dev/null
+++ b/Tests/AckGenTests/DuplicateLicenseFileTests.swift
@@ -0,0 +1,136 @@
+//
+//  DuplicateLicenseFileTests.swift
+//  AckGenTests
+//
+//  Created by Copilot on 2026-02-07.
+//
+
+import XCTest
+import Foundation
+@testable import AckGenCore
+
+final class DuplicateLicenseFileTests: XCTestCase {
+    
+    var tempDir: URL!
+    var packageCachePath: URL!
+    
+    override func setUp() {
+        super.setUp()
+        // Create a temporary directory structure that simulates SPM checkouts
+        tempDir = FileManager.default.temporaryDirectory.appendingPathComponent(UUID().uuidString)
+        packageCachePath = tempDir.appendingPathComponent("SourcePackages/checkouts")
+        try? FileManager.default.createDirectory(at: packageCachePath, withIntermediateDirectories: true)
+    }
+    
+    override func tearDown() {
+        super.tearDown()
+        try? FileManager.default.removeItem(at: tempDir)
+    }
+    
+    /// Scans the package cache path for license files, mimicking the CLI logic.
+    /// - Parameter shouldBreak: If true, breaks after finding the first license file per package (correct behavior).
+    ///                          If false, continues scanning all license files (buggy behavior).
+    /// - Returns: Array of acknowledgements found
+    private func scanForLicenses(shouldBreak: Bool) throws -> [Acknowledgement] {
+        let licenseFiles: [String] = ["LICENSE", "LICENSE.txt", "LICENSE.md"]
+        let fileManager = FileManager.default
+        let packageDirectories = try fileManager.contentsOfDirectory(atPath: packageCachePath.path)
+        var acknowledgements = [Acknowledgement]()
+        
+        for pkgDir in packageDirectories where pkgDir.prefix(1) != "." {
+            for file in licenseFiles {
+                guard let data = fileManager.contents(atPath: "\(packageCachePath.path)/\(pkgDir)/\(file)") else { continue }
+                guard let license = String(data: data, encoding: .utf8) else { continue }
+                let new = Acknowledgement(title: pkgDir, license: license)
+                acknowledgements.append(new)
+                if shouldBreak {
+                    break  // This break prevents duplicate entries
+                }
+            }
+        }
+        
+        return acknowledgements
+    }
+    
+    func testPackageWithMultipleLicenseFilesGeneratesOnlyOneAcknowledgement() throws {
+        // Given: A package directory with multiple license files (LICENSE, LICENSE.txt, LICENSE.md)
+        let packageName = "TestPackage"
+        let packageDir = packageCachePath.appendingPathComponent(packageName)
+        try FileManager.default.createDirectory(at: packageDir, withIntermediateDirectories: true)
+        
+        // Create all three license file variants
+        let licenseContent1 = "MIT License - from LICENSE"
+        let licenseContent2 = "MIT License - from LICENSE.txt"
+        let licenseContent3 = "MIT License - from LICENSE.md"
+        
+        try licenseContent1.write(to: packageDir.appendingPathComponent("LICENSE"), atomically: true, encoding: .utf8)
+        try licenseContent2.write(to: packageDir.appendingPathComponent("LICENSE.txt"), atomically: true, encoding: .utf8)
+        try licenseContent3.write(to: packageDir.appendingPathComponent("LICENSE.md"), atomically: true, encoding: .utf8)
+        
+        // When: Scanning the package directory with break (correct behavior)
+        let acknowledgements = try scanForLicenses(shouldBreak: true)
+        
+        // Then: Only one acknowledgement should be created for the package
+        XCTAssertEqual(acknowledgements.count, 1, "Should only create one acknowledgement per package, even with multiple license files")
+        XCTAssertEqual(acknowledgements[0].title, packageName)
+        
+        // The first found license file (LICENSE) should be used
+        XCTAssertEqual(acknowledgements[0].license, licenseContent1, "Should use the first matching license file (LICENSE)")
+    }
+    
+    func testMultiplePackagesWithMultipleLicenseFiles() throws {
+        // Given: Multiple packages, each with multiple license files
+        let package1 = "Package1"
+        let package2 = "Package2"
+        
+        let package1Dir = packageCachePath.appendingPathComponent(package1)
+        let package2Dir = packageCachePath.appendingPathComponent(package2)
+        
+        try FileManager.default.createDirectory(at: package1Dir, withIntermediateDirectories: true)
+        try FileManager.default.createDirectory(at: package2Dir, withIntermediateDirectories: true)
+        
+        // Package1 has LICENSE and LICENSE.txt
+        try "License for Package1".write(to: package1Dir.appendingPathComponent("LICENSE"), atomically: true, encoding: .utf8)
+        try "License txt for Package1".write(to: package1Dir.appendingPathComponent("LICENSE.txt"), atomically: true, encoding: .utf8)
+        
+        // Package2 has LICENSE.txt and LICENSE.md
+        try "License txt for Package2".write(to: package2Dir.appendingPathComponent("LICENSE.txt"), atomically: true, encoding: .utf8)
+        try "License md for Package2".write(to: package2Dir.appendingPathComponent("LICENSE.md"), atomically: true, encoding: .utf8)
+        
+        // When: Scanning all package directories with break (correct behavior)
+        let acknowledgements = try scanForLicenses(shouldBreak: true)
+        
+        // Then: Should have exactly 2 acknowledgements (one per package)
+        XCTAssertEqual(acknowledgements.count, 2, "Should have one acknowledgement per package")
+        
+        let titles = Set(acknowledgements.map(\.title))
+        XCTAssertTrue(titles.contains(package1))
+        XCTAssertTrue(titles.contains(package2))
+        
+        // Verify each package uses its first available license file
+        let ack1 = acknowledgements.first { $0.title == package1 }
+        let ack2 = acknowledgements.first { $0.title == package2 }
+        
+        XCTAssertEqual(ack1?.license, "License for Package1", "Package1 should use LICENSE (first in order)")
+        XCTAssertEqual(ack2?.license, "License txt for Package2", "Package2 should use LICENSE.txt (first available)")
+    }
+    
+    func testPackageWithoutBreakWouldCreateDuplicates() throws {
+        // Given: A package with multiple license files
+        let packageName = "DuplicateTest"
+        let packageDir = packageCachePath.appendingPathComponent(packageName)
+        try FileManager.default.createDirectory(at: packageDir, withIntermediateDirectories: true)
+        
+        try "License 1".write(to: packageDir.appendingPathComponent("LICENSE"), atomically: true, encoding: .utf8)
+        try "License 2".write(to: packageDir.appendingPathComponent("LICENSE.txt"), atomically: true, encoding: .utf8)
+        
+        // When: Scanning WITHOUT break statement (old behavior)
+        let acknowledgements = try scanForLicenses(shouldBreak: false)
+        
+        // Then: WITHOUT break, we would get 2 entries for the same package (demonstrating the bug)
+        XCTAssertEqual(acknowledgements.count, 2, "Without break, multiple entries are created for the same package")
+        XCTAssertEqual(acknowledgements[0].title, packageName)
+        XCTAssertEqual(acknowledgements[1].title, packageName)
+        XCTAssertNotEqual(acknowledgements[0].license, acknowledgements[1].license, "Each entry has different license content")
+    }
+}