Licenses versus contracts

W. Yip weng at
Wed Mar 29 13:40:02 UTC 2000

On Tue, 28 Mar 2000 20:34:34 -0800, David Johnson <david at>
>I'm starting to get confused. What exactly is the difference between a
>license and a contract? Where does one draw the line? Is there some
>legal concept here, or is this just some random and arbitrary ruling?

The license and the contract are two distinct legal concepts, which
regrettably are known to overlap.

The following is a very general outline of both concepts for you to make a
contrast. Please note that when both concepts are applied to software, the
picture changes considerably.

License: This is an abstract form of permission, granted to make lawful
what would otherwise be unlawful. As such, it is a very broad concept. It
is abstract because a license does not have to take any particular form.
The license is often built upon a proprietary interest in property. Eg. A
Bare License: You own land, and grant a license to someone to enter it.
Supposing you ask him to leave at some point, you do not 'violate the
license', because it only represents your permission. You revoke the
permission, and he has to leave or else risk trespassing.

However, because licenses do not have to take a particular form, they are
NOT limited to bare and oral licenses which can be easily revoked. Instead,
Licenses are common in contracts.

Contract: This is comparatively more concrete in that it requires an
offer-acceptance framework. There are other ingredients required which vary
among jurisdictions, but mainly this comprises something along the lines of
an 'intention to form a contractual relationship'. The fruit of the
contract are the obligations of performance/omission as dictated by the

Example of overlap; You own land. You build a cinema on it. You show movies
in the cinema. You sell movie tickets. A person who buys the movie ticket
has contractual license. He has entered into a contractual relationship. He
has the obligation of letting you see the movie. You have the obligation of
paying for the ticket. Concurrently, the movie ticket also gives you the
license to enter his land, into his cinema to watch the movie. If  you
(cinema owner) asks your customer to leave at some point, you may be liable
in damages for contractual breach. As far as the license (permission) is
concerned, you have revoked it, provided you have given adequate and
reasonable notice.

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