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Difference Between Lease and License

The term lease and license are defined under Section 105 of the Transfer of Property Act and Section 52 of the Indian
Easements Act respectively.
Section 105 of Transfer of Property Act:
Lease Defined. A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or
implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of
value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such
terms.
Section 52 of the Easements Act, 1882:
License, Defined. Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do,
in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such
right does not amount to an easement or an interest in the property, the right is called, a license.
Summary: Lease vs. License Differences
Lease

License
mere permission to do something without any transfer
transfer of an interest
of interest
both transferable and heritable
neither transferable nor heritable
Comes to an end only in accordance with the terms and can be withdrawn at any time at the pleasure of the
conditions stipulated in the contract
grantor
entitled to any improvement or accession made to the
Not so entitled
property
unaffected by the transfer of the property by sale in
comes to an end immediately if the property is sold to a
favour of third party and continues
third party
lessee has the right to protect the possession in his own licensee cannot defend his possession in his own name
right
as he does not have any propriety right in the property
does not come to an end either by death of the grantor comes to an end with the death of either grantor or the
or the grantee
grantee
What is the difference between 'Sale' and 'Agreement' to Sell'?
The following are the main points of distinction between a ' sale ' and 'an agreement to sell':
1. Transfer of property (ownership):
In a ' sale ', the property in goods passes to the buyer immediately at the time of making the contract. In other words, a sale
implies immediate conveyance of property so that the seller ceases to be the owner of the goods and the buyer becomes the owner
thereof. It creates a jus in ram, i.e., gives right to the buyer to enjoy goods as against the whole world.
In 'an agreement to sell', there is no transfer of property to the buyer at the time of the contract. The conveyance of property
takes place later so that the seller continues to be the owner until the agreement to sell becomes a sale either by the expiry of
certain time or the fulfillment of some condition.
Thus where A agrees to buy 50 kg wheat from B and the wheat is yet to be weighed, the transaction is an agreement to sell
because as per Section 22, in such a case the property does not pass to the buyer till the goods are weighed and the buyer has notice
thereof. The transaction becomes a sale and the property in the goods passes to the buyer after the wheat is weighed and the

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buyer has notice thereof. An agreement to sell creates a just in personam, that is, it gives a right to either buyer or seller against the
other for any default in fulfilling his part of the agreement.
It is worth noting that this is the basic point of distinction between a ' sale ' and 'an agreement to sell.' All other points of
distinction follow from this basic difference, i.e., whether the property in the goods has passed or is yet to pass from seller to
buyer, on the other hand, in case of an agreement to sale where the ownership in the goods is yet to pass from seller to the buyer,
such loss has to be borne by the seller.
3. Consequences of breach:
In case of sale, if the buyer wrongfully neglects or refuses to pay the price of the goods, the seller can sue for the price, even
though the goods are still in his possession. In case of an agreement to sell, if the buyer fails to accept and pay for the goods, the
seller can only sue for damages and not for the price, even though the goods are in the possession of buyer.
4. Right of resale:
In a sale, the property is with the buyer and as such, the seller (in possession of goods after sale) cannot resell the goods. If he does
so, the subsequent buyer having knowledge of the previous sale does not acquire a title to the goods. The original buyer can sue
and recover the goods from the third person as owner, and can also sue the seller for the breach of contract as well as for the tort of
conversion. The right to recover the goods from the third person is, however, lost if the subsequent buyer had bought them
bonafide without notice of the previous sale (Sec. 30).
In an agreement to sell, the property in the goods remains with the seller and as such, he can dispose of the goods as he likes and
the original buyer can sue him for the breach of contract only. In this case, the subsequent buyer gets a good title to the goods,
irrespective of his knowledge of previous sale. Further, goods forming the subject matter of an agreement to sell can also be
attached in execution of a decree of a court of law against the seller.
5. Insolvency of buyer before he pays for the goods:
In a sale, if the buyer is adjudged insolvent before he pays for the goods, the seller, in the absence of a 'right of lien' over the goods,
must deliver the goods to the Official Receiver or Assignee. The seller is entitled only to a rateable dividend for the price of the
goods. But in an agreement to sell, in these circumstances, the seller may refuse to deliver the goods to the Official Receiver or
Assignee unless paid for, as ownership has not passed to the buyer.
6. Insolvency of seller if the buyer has already paid the price:
In a sale, if the seller is adjudged insolvent, the buyer is entitled to recover the goods from the Official Receiver or Assignee, as the
property in the goods rests with the buyer. On the other hand, in an agreement to sell, if the buyer has already paid the price and the
seller is adjudged insolvent, the buyer can only claim a rateable dividend (as a creditor) and not the goods, because property in
them still rests with the seller.
Q:- What is sale ? What are the essentials of a valid sale ? What is contract for sale ? What are the difference between the
two ?
Sale is defined by section 54 of the Transfer of Property Act . According to the section 54 sale is a transfer of ownership in
exchange for a price paid or promised , or partly paid and partly promised to pay .
The essentials of a valid sale are as follows :1) According to section 7 , the seller must be a competent person to transfer .
2) According to section 6 , the transferee must be a competent person and must not be a person disqualified to be a transferee .

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3) According to section 6 , the subject matter should be transferable immovable property .
4) The ownership must be transferred .
5) The transfer of ownership must be in exchange for price .
6) The price must be paid or promised to pay or partly paid and partly promised to pay .
7) The deed of conveyance must be registered in case of transfer of a tangible immovable property of the value of ` Rs. 100 /- and
upwards .
8) In case of tangible immovable property of a value less than Rs. 100 /- , there must be either a registered deed of conveyance ,
or delivery of property .
A contract for sale is also defined by section 54 of the Act . According to section 54 a contract for sale of immovable property is
a contract that a sale of such property shall take place on terms settled between the parties . It does not , of itself , create any
interest in , or charge on , such property .
In English law , the purchaser , by virtue of the contract for sale , becomes owner of the property , from the date of the contract ,
according to equity . But in India , vendor's ownership in the property is not affected by the contract for sale until the deed of
conveyance is not registered .
The difference between sale and contract for sale may be shown in the following tabular form .

1.

Sale .

Contract for sale.

Sale is a transfer of ownership of immovable

Contract for sale is only an agreement to sell

property .

immovable property in future on such terms

settled between the parties .

2.

Sale creates interest in the immovable property in

Contract for sale does not create any ----

favour of the purchaser .

a) interest in ,
b) or charge on such property . Ownership
remains intact in favour of the vendor .
3.

4.

Sale passes an absolute legal title to the purchaser

Contract for sale does not pass any legal title to

the purchaser .

Sale creates a right in rem in favour of the

Contract for sale creates only a right in personam

purchaser .

in favour of the purchaser enforceable against the

promisor or a subsequent purchaser without
notice.

5.

Sale must be completed by a deed of registered

According to the explanation 17, of the Indian

conveyance in case of ---

Registration Act , a contract for sale need not be

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a) a tangible immovable property of the value of
Rs. 100 or more ,
b) a reversion or
c) other intangible thing.

registered at all .