Differences between Lease & License

Differences between Lease and License

1991 with Books - 10 marks.

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Lease:   

1. It is an agreement between the Lessee (user) and the Lessor (owner) for use of an asset in return for specified rental/lease payments.

2. As per Section 105 of The transfer of Property Act, 1882   -  " A transfer of right to enjoy the concerned property for a pre-defined time period or in perpetuity subject to the consideration given by Lessee (user of the property)  to the Lessor (owner of the property).
License:

1. A promise by the Licensor not to sue the Licensee.  That means without a License, any use or exploitation of intellectual property by a third party would amount to copying or infringement.

2. As defined in section 52 of the Indian Easements Act, 1882  -  " License does not allow any interest in the Property on the Licensee's part.  It merely gives the Licensee the right to use and occupy the Property for a limited duration."

Basically looks both terms are one and alike.  But for entitlement/possession and title of property, many a difference between Lease and Licensee.  Those who ( Property owners) avoid risk will prefer License mode.  But they have to lose higher remuneration/compensation compare to Lease mode.

Lease	License
1.Parties: Lessor (owner) and Lessee (user)	1.Parties: Licensor (who accorded permission) and Licensee (to whom permission is accorded)
2. Exclusive possession of property to Lessee for a period of time.	2. No such exclusive possession of property to Licensee.
3. It is irrevocable.  Means cannot be cancelled before the completion of Agreement unless otherwise specified.	3. It is revocable/cancel before the completion of Agreement at the choice of Licensor.
4. Consideration is called Lease rental	4. consideration is called Fees.
5. It is transferable.  That means Lessee can transfer the lease to third party.	5.  It is not transferable.
6. Transfer of interest in the property to the Lessee.	6. Here the legal possession continues to be with the Licensor, not Licensee.  But Licensee is permitted to make use of the property for a particular purpose.  So it does not create any interest in the property to Licensee.
7. Can be terminated as per the terms of Agreement only.  ( But not at the will of parties).	7.  Can be withdrawn /terminated at any time by the Licensor.  For this reason organizations such as Indian Railways prefer License option rather than Lease option, while permit using of its assets by third parties.
8. It does not come to an end either by death of Lessor or the Lessee.	8. But here it come to an end either by Licensor or Licensee.
9. Lessee entitled to any improvement made to the property.	9.  No such entitlement to  Licensee for any improvement to the property.

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