Key point
- Whether a contractual licence is revocable must have regard to its terms
Facts
- The theatre owner (D) granted a licence to theatre company (C), which contained an option for periodic extension, with rent payable weekly
- After C exercised its option to extend the licence, D served notice on C to terminate the licence in breach of contract as there was no term allowing him to do so
- C sought a declaration that the licence was irrevocable
- D argued that the contract was revocable and only damages for breach of contract arose
Held (Court of Appeal)
- The licence was not revoked
Lord Greene MR
A licence is not an interest distinct from contract: p. 680
- The first thing to do is to construe the contract according to ordinary principles
- The question of whether the licence is revocable, by which party or both, and whether notice is required are questions of construction of the contract
On revocation
- Equity can grant an injunction to restrain revocation in breach of contract, where based on the construction of the contract, there is an express or implied negative clause not revoke
- If the licence has been purportedly revoked, equity will restrain the licensor from acting upon the purported revocation
- In the present case the grant of an irrevocable option is a negative undertaking and D is restrained from acting upon its purported revocation of the contract
Held (House of Lords)
- The revocation was effective
- Based on the terms of the contract, the licence was not intended to be perpetual and could be determined by the owner upon reasonable notice of one week since rent is payable weekly
- Once notice to revoke is given, C has a reasonable period of time to withdraw from the premises
Lord Porter
- “It is one thing to say that a limited and temporal licence remains in force until the particular object for which it is given is fulfilled or the definite period of time has elapsed, it is quite a different matter to allege that a licence once given in general terms can never be terminated.”: p. 194
Commentary
- The differing outcomes in the House of Lords and Court of Appeal was a result of different interpretations of the contract between C and D
- The interpretation of the Court of Appeal would have rendered the licence perpetual unless C wished to terminate, which would be unusual and burdensome on D
- This case can be distinguished from Hurst on the basis that the licence in Hurst was only meant to last for the duration of the performance