Contractual Licenses and Leasehold Covenants

Question 1

What if it is NOT a lease?

Answer 1

• It becomes license or implication

Question 2

What is a license?

Answer 2

• Contractual agreement to allow someone to access land –> if arrangement does not meet LEGAL lease or establish equitable lease –> likely to be license

Question 3

What are the features of a license?

Answer 3

• Enforceable in personam
• Licenor revokes license –> remedies most likely damages rather than injunctions

Question 4

What are the 3 types of Licenses?

Answer 4

• Bare license
• Contractual license
• License coupled w grant

Question 5

What is a Bare License?

Answer 5

Unilateral permission to enter/use land –> no requirement for anything in return so no enforceable contract e.g. inviting someone to party

Question 6

What is a contractual license?

Answer 6

• Enforceable agreement involving giving someone permission to enter land in order to fulfill a specific obligation –> charging someone entry for party or paying plumber to come do repairs at home

Question 7

What is a license couple w grant?

Answer 7

• Agreement to enter/use land that co-exists alongside a property right e.g. easement for neighbour to cross land is a property right but also comes w personal agreement w you that you will allow access them to use that right

Question 8

What types of licenses can you revoke?

Answer 8

• Bare license revoked at any time
• Revocation of contractual license MAY result in breach of contract
• Licenses coupled w grants are irrevocable unless specific provision provision made to allow revocation

Question 9

What if license revoked and someone doesn’t leave?

Answer 9

–> Get an injunction to prevent them from re-entering
–> If you grant someone contractual license and revoke unlawfully –> Licensor liable for damages

Question 10

Can you enforce a license against third party?

Answer 10

• Licenses are typically enforceable in personam

Question 11

What if there is a breach of contract for contractual licenses?

Answer 11

• Give you remedy of damages for losses incurred unless:
  a) Damages would be manifestly inadequate
  b) 3rd party who has acted genuinely unconscionability –> in which case there may be discretion to impose license obligation on 3rd party

Question 12

What are leasehold covenants?

Answer 12

• ‘Privity of Estate’ or ‘Privity of Contract’
• Enforceable against the world

Question 13

What if parties of a Leasehold Covenant changes?

Answer 13

• Specific terms of contract are only enforceable b/w OG parties
• Leasehold estate runs w land and is always enforceable against the world

Question 13

How are Covenants and Contractual terms bounded by parties?

Answer 13

Covenants are RUNNING with land
Contractual terms are specific to OG parties

Question 13

What are 3 conditions Covenants must have?

Answer 13

• Landlord obliged to allow tenant ‘quiet enjoyment’ of property
• Landlord obliged not to derogate from grant
• Landlord obliged to ensure fitness for human cohabitation at beginning of lease

Question 13

What is Quiet Enjoyment?

Answer 13

• Rights for tenant to enjoy using land without interference from others, particularly landlord
  –> e.g. Removing AC from land

Question 13

What is Non-derogation from grant?

Answer 13

–> Done something to property NEXT DOOR
–> Second lease must cause SUBSTANTIAL interference w first lease–> must demonstrate incompatibility of use, ECONOMIC competition is not sufficient

Question 14

What is an exception to non-derogation of grant?

Answer 14

• no Derogation of Grant if use of premises is particularly sensitive and landlord was not aware of this at the time they granted the second lease

Question 15

When might the leasehold change?

Answer 15

• Tenants may assign tenancy to another person
• Landowner MAY sell freehold to another person, who would still be bound by the lease

Question 16

What is the ‘Touch and Concern Test?’

Answer 16

A lease covenant will touch and concern the land if the covenant: affects the nature, quality, or value of the land, or the mode of using or enjoying the land

Question 16

What are the 4 steps to formulating a Touch and Concern Test?

Answer 16

1. For it to be a covenant –> must affect land itself e.g. nature, quality, mode of use
2. Alleged covenant must not be expressed to be personal (it has to be landlord)
3. If covenant involves paying money –> doesn’t prevent it from being a covenant for the purposes of touching n concerning land as long as other limbs are satisfied
4. Promise must be intrinsically linked to the lease relationship (If you took away leasehold, promise would have no meaning)