A modern example of a licence coupled with an interest

A licence to use a signboard granted at the same time as, and in connection with, the sale of a shop could be a licence coupled with an interest. It is irrevocable and binding on third parties such as a purchaser from the licensor.

In Incorporated Owners of Kwai Chung Plaza v Giant Earnings Limited ([2009] HKEC 536) Giant Earnings Limited bought a shop on the ground floor of Kwai Chung Plaza. At the time of the sale of the shop, the developer had reassured Giant Earnings that the owners of the shop and it tenants would be allowed to use the signboard free of charge. The developers later transferred ownership of the signboard to the Incorporated Owners. The Incorporated Owners purported to terminate the licence. It was held that this was a licence coupled with an interest. The licence was connected with the purchase of the shop. As a result, the licence was irrevocable and binding on third parties. It is slightly puzzling that the resulting declaration was that the licence could not be revoked while Giant Earnings were the legal and beneficial owners of the shop. This seems inconsistent with the idea that the licence is coupled with title to the shop. One would have thought that it should therefore subsist whoever owns the shop.

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