Third parties are not bound by a licence

Third parties (such as purchasers or tenants) are not bound by a licence agreement.

In King v David Allen and Sons, Billposting, Limited ([1916] 2 AC 54, HL) King owned land and granted David Allen and Sons a contractual licence to put posters and advertisements on the side wall of a cinema that was to be built on the land. King granted a lease of the cinema to a third party who refused to honour the licence. It was held that the tenant of the cinema was not bound by the licence as it was a purely personal agreement and did not create any estate or interest in land. King was liable to David Allen and Sons in damages for breach of the licence. The lease did not mention the licence but it would presumably have made no difference had it done so.

Lord Buckmaster rejected the idea that the agreement between King and David Allen and Sons could be a lease even though there was exclusivity and an agreed term. He held that this type of arrangement was not capable of being a lease or an easement (at 60 – 61).

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