What is a Leave and License Agreement?
A leave and license agreement is a legal document that governs the relationship between the licensor (owner of the property) and the licensee (who is granted the license to use that property. The agreement outlines the terms and conditions that both parties must adhere to during the term of the license.
The agreement is drafted with the objective of having a clarity related to the terms and conditions of the agreement. It also specifies about the obligations of both the parties with respect to the license and licensed premises.
As a contract drafter, it is important to ensure that the agreement includes all the necessary terms and conditions that protect the interests of both parties. A well-drafted leave and license agreement can help avoid any disputes between the parties and ensure a smooth and successful relationship.
Some Important Clauses to be Included in the Agreement
- The license granted to the licensee under a leave and license agreement is usually for a fixed period. The agreement specifies the start and end date of the license, as well as the terms and conditions for renewal or termination of the license.
- Some of the most important aspects of a leave and license agreement is the consideration. The consideration is the amount that the licensee must pay to the owner for the license to use the property. The consideration is usually a fixed amount that is paid periodically, such as monthly or quarterly.
- The agreement also specifies the permitted use of the property by the licensee. This includes the type of business that the licensee can conduct on the property, as well as any restrictions on the use of the property. For example, the agreement may prohibit the licensee from using the property for any illegal activities or activities that may cause damage to the property.
- The leave and license agreement also outlines the obligations of both parties during the term of the license. The Licensor is responsible for maintaining the property and ensuring that it is in a suitable condition for use by the licensee. The licensee, on the other hand, is responsible for using the property in accordance with the terms of the agreement and for paying the consideration as specified in the agreement.
- The agreement also specifies the consequences of any breach of the terms and conditions by either party. This includes the right of the licensor to terminate the license in case of any breach by the licensee or the right of the licensee to seek damages from the owner in case of any breach by the owner.
Leave and License Agreement Format
Leave and License Agreement
This Leave and License Agreement (hereinafter referred to as ‘Agreement’) is made at [City] this [Day, Month] of [Year], herein referred to as the (‘Effective date’).
BY AND BETWEEN
__________, Son of _________, aged _________ years, holding PAN number ______________ permanently residing at ____________________________________________________________________________________________________, (hereinafter referred to as “THE LICENSOR”, which expression shall, unless repugnant to the context and meaning include his heirs, successors, administrators and assigns) of the ONE PART;
__________, Son of _________, aged _________ years, holding PAN number ____________ permanently residing at ____________________________________________________________________________________________________, (hereinafter referred to as “THE LICENSEE”, which expression shall mean and include only the LICENSEE of the OTHER PART;
WHEREAS the LICENSOR is seized and possessed or otherwise well and sufficiently entitled to the premises situated at _______________________________________________________________________________________________________ with a total area of __________________ square feet and comprised of _____ rooms. (hereinafter referred to as “LICENSED PREMISES” )
WHEREAS, the LICENSEE is engaged in the business of _______________________________ and requires a temporary premise for running his Shop, has approached the LICENSOR with a request to allow the LICENSEE herein for temporary possession of the Licensed Premises on a Leave and License basis.
WHEREAS on the request of the LICENSEE, the LICENSOR has agreed to grant a License in respect of the Licensed Premises for a term of _______________ Months/Years in the manner from now on appearing.
NOW THEREFORE IT IS HEREBY AGREED TO, DECLARED AND RECORDED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:-
- The term of this Leave and License Agreement shall be for _____months/year taking effect from _____ (effective date) to _____ (expiration date)
- During this period, the LICENSEE shall have the exclusive right to occupy and utilise the Licensed Premises as per the terms and conditions of this Agreement.
- The Agreement may be renewed after the expiry date, subject to the fresh and mutually agreed terms and conditions between the LICENSOR and the LICENSEE.
2. Payment Clause
- In consideration of taking the occupancy of the Licenced Premises on the License, the LICENSEE shall make a payment of Rs ___________/- (Rupees ______________ Only), to the LICENSOR as an interest-free security deposit on the Execution Date of this Agreement.
- Such security deposit shall be refunded to the LICENSEE at the time of expiration, pre-termination or cancellation of the Agreement, but shall be subject to deductions arising due to the arrears of the licensed fee, CAM charges, or any other dues/penalties payable by the LICENSEE during the Agreement following the terms and conditions of this Agreement.
- If the LICENSOR fails to pay the security deposit by the date of the expiration, pre-termination or cancellation of the Agreement then the LICENSEE shall be entitled to the possession of the Licenced premises, but liable to pay the agreed monthly license fee without any escalation until he receives such due security deposit from the LICENSOR.The LICENSEE shall pay to the LICENSOR a sum of Rs _________/- (Rupees___________ only), as the monthly License fee of the ‘Licensed Premises’ before the 5th day of every English Calendar month.
- The method of Payment preferred by both the parties is ___________
- Delay in the payment of the monthly License fee consecutively for __________ months shall entitle the LICENSOR to terminate the Agreement.
- The Renewal of the Agreement shall have an escalation up to _____% per annum in the monthly License fee with mutual consent by both parties.
- Both the parties to the Agreement have mutually agreed upon a Lock-in-Period of ______ months (in words) (hereinafter referred to as Lock-in Period) taking effect from the Effective Date of this Agreement. During this period, the parties are restrained from terminating the Contract and obligated towards the smooth functioning of the Agreement.
- The LICENSEE acknowledges that he shall make a continuous and non-interrupted payment of the monthly License fee minimum for a period of _____________ months during the Lock-in Period.
- Both parties acknowledge and agree that the Lock-in Period is binding upon them for the duration specified.
- In the event of the termination of the Agreement during the Lock-In Period by the LICENSOR due to the breach of the terms and conditions of this Agreement committed by the LICENSEE then the LICENSEE shall be liable to pay the remaining monthly License fee payable during the Lock-in Period to the LICENSOR.
- In the event of the termination of the Agreement during the Lock-In Period by the LICENSEE due to the breach of the terms and conditions of this Agreement committed by the LICENSOR then the LICENSOR shall be liable to pay the remaining monthly License fee payable during the Lock-in Period to the LICENSEE.
- Notwithstanding the above provisions, either party may terminate this Leave and License Agreement during the Lock-In Period upon mutual written agreement.
- Both the parties shall be entitled to immediate termination of the Agreement during the Lock-In Period and be exempted from all liabilities or penalties in the events of force majeure or any circumstances beyond reasonable control making the performance of this Agreement practically impossible.
4. Representations and Warranties by the LICENSOR
The LICENSOR represents that;
- He is the lawful and absolute owner of the Licensed Premises and enjoys all rights, title and interest therein;
- The LICENSOR retains the sole and exclusive right to license his property and reserves the right to refuse or reject any offer of licensing the same.
- The said property is free of all security interest, lien and encumbrances;
- The LICENSOR is free of all criminal charges and judgements against him including insolvency;
- The License Premises was constructed in accordance with applicable laws. No notices have been issued by any municipal authority or local body challenging the legality of the Licensed Premises;
- The LICENSOR has conducted all due diligence concerning the LICENSEE including a police verification before leasing the said premises to him;
- The LICENSEE acknowledges that, apart from the above-mentioned representations, the LICENSOR has made no express or implied representations or warranties concerning the licensed Premises;
- The LICENSOR shall indemnify the LICENSEE for any damages caused to him by the breach of the above-mentioned representations and warranties by the LICENSOR;
5. Representations and Warranties by the LICENSEE
The LICENSEE represents and warrants that;
- He can legally enter this Agreement and is free from any criminal charges against him;
- He is financially capable of entering into this Agreement and can bear the financial cost of the license.
- He has obtained all the necessary licenses and complied with all the statutory requirements mandatory to run his business
6. Duties and Obligations of the LICENSOR
- The LICENSOR himself shall bear all the municipal taxes and statutory duties levied on the Licensed Premises.
- Any need for structural repairs arising in the Licensed Premises naturally shall be borne by the LICENSOR.
- The LICENSOR shall be liable to pay for the damages caused to the Licensed Premises due to natural calamities.
- The LICENSOR shall refrain from engaging in any such activity in the Licenced Premises which may cause unreasonable disturbance in the peaceful possession of the LICENSEE;
- The LICENSOR shall serve a notice of 30 days before the pre-termination or cancellation of the Agreement;
7. Duties and Obligations of the LICENSEE
- The Licensed Premises shall be used only for the aforesaid purpose by the LICENSEE.
- The LICENSEE shall make the regular payment of the above-mentioned License fee on the pre-fixed time.
- The LICENSEE shall use the property with reasonable care and ensure the physical well-being of the property;
- The LICENSEE shall not conduct any illegal activity prohibited by the Central or the State Government on the Licensed Premises;
- The LICENSEE shall refrain from causing any kind of nuisance to the neighbours;
- The electricity, telephone, internet, water charges, and all Common Area Maintenance charges (CAM) in respect of the Licensed Premises shall be borne by the LICENSEE on a timely basis.
- The LICENSEE shall pay for the wear and tear damages amounting up to Rs ______/- (Rupees _____________ Only).
8. No Tenancy
No tenancy rights are created, the LICENSEE shall not transfer, assign, sub-let, sub-license or mortgage the Licensed Premises.
- The LICENSOR, after giving a prior notice of ____ hours/days and between ___am to ____pm, shall have the right to enter and inspect the Licensed Premises either by himself or by any other person appointed by him with the object of examining the physical condition of the said property or check upon to on the activities carried by the LICENSEE.
- The LICENSOR shall also be entitled to enter upon the Licensed Premises on account of any complaints of private or public nuisance made by the neighbours against the LICENSEE, or for collection of License fee or repair purposes.
- The LICENSOR or his authorized representative shall not cause any unreasonable disturbance to the LICENSEE’s right of quiet enjoyment of the Licensed Premises during the inspection.
- It shall be the duty of the LICENSEE to allow easy access to the Licensed Premises to the LICENSOR or his representative during the inspection.
- The LICENSEE shall be allowed to erect temporary fittings, fixutures wooden partitions or any such minor additions or alterations in the Licensed Premises provided the same shall be removable without damaging the original condition of the Licensed Premises at the time of the expiration, pre-termination or cancellation of the Agreement.
- The LICENSEE shall not be permitted to make any material additions or alterations in the Licensed Premises or any part or parts thereof, during the License term without intimating the LICENSOR about the need for such additions or alterations in writing.
- The LICENSEE is obligated to submit a request and supporting documents about the same to the LICENSOR regarding any needful alterations.
- The LICENSEE may conduct the alterations only after obtaining permits and approvals.
- Any unauthorised alteration or addition in the Licensed Premises, or any part or parts thereof, other than movable furniture and trade fixtures, shall, unless otherwise provided in the agreement between the LICENSOR and the LICENSEE, be and become the property of the LICENSOR and remain in the property at the expiration or earlier termination or cancellation of this Agreement.
The LICENSOR by serving a notice prior ____days (in words), shall have the right to cancel the Agreement before its expiry and demand the LICENSEE to vacate the Licensed Premises on the following grounds;
- If the LICENSEE is found guilty of conducting any illegal activity on the premises;
- If the LICENSEE is guilty of causing any nuisance to the neighbours;
- If the LICENSEE has made any material addition or alteration in the premises without the consent of the LICENSOR.
- If the LICENSEE fails to promptly pay the monthly License fee or fails to pay the same consecutively for ____ months whether or not such a fee was demanded.
- If the LICENSEE breaches any of the terms of the Agreement;
- If the LICENSOR urgently needs to retain the Licensed Premises due to unforeseen reasons, in that case, the LICENSEE shall be duty-bound to vacate the said premises and hand over the peaceful possession of the same. upon a written notice served prior ______________ days by the LICENSOR.
- The LICENSOR is entitled to regain the possession of the Licensed Premises in a sound condition on the Agreement’s expiration, cancellation or pre-termination.
- The LICENSEE shall vacate the licensed PREMISES in a sound condition and hand over the peaceful possession of the same immediately after the expiry of the Agreement whatsoever without any objection and without any necessity to be served by the written notice about the same.
- In case of pre-termination or cancellation of the Agreement, a written notice before __________ days shall be served by the party initiating such pre-termination or cancellation to the other party.
- If the LICENSEE fails to vacate the premises even after the expiration, pre-termination or cancellation of the Agreement, the LICENSOR shall be entitled to regain the possession of the same without recourse to the Court of Law
- The events of Force-Majeure shall include but are not limited to any act of God, fire, flood, riots, physical or mental illness, epidemic quarantine restrictions, insolvency or any other unforeseen circumstances beyond reasonable control making the performance of the contract practically impossible.
- Any event of force majeure shall not constitute a breach of contract on the part of either Party.
- Parties are obligated to resume the performance of the Agreement as soon as reasonably possible. Still, non-performance of the Agreement due to the Force-Majeure events for a continued period of ____days shall entitle either party to terminate the Agreement.
- Termination of the Agreement due to the Force-Majeure events shall exempt the parties from all the liabilities and penalties payable following the terms of this Agreement.
13. Dispute Resolution
- Any dispute, claim, or controversy arising out of the Agreement shall be settled by the way of Arbitration.
- The arbitration award shall be final and binding upon the Parties, and judgment upon the award may be entered in any court having jurisdiction.
- Notwithstanding anything mentioned above, either partner may seek interim injunctive relief or other equitable remedies from a court of competent jurisdiction to protect its rights and interests pending the arbitration proceedings.
- The costs and expenses incurred in the dispute resolution process, including arbitration fees, shall be borne as determined by the arbitrator, taking into account the dispute’s circumstances and the Parties’ conduct.
- The Arbitrator may pass the ex-parte order if either party disrupts or remains absent from the arbitration proceedings, and such order shall be binding upon both parties.
The Registration fee if any, and the stamp duties in respect of the licensed Premises shall be borne by the LICENSEE.
IN WITNESSETH WHEREOF the parties hereto have herein unto set and subscribed their respective hands on the day and year mentioned hereinabove.
Signed, Sealed and Delivered by:
In the presence of Witnesses: