INTRODUCTION TO LEGAL STUDIES

Introduction to Legal Studies

Introduction to Legal Studies

Question 01

A negative covenant in an indenture stating that the corporation will not pledge any of its assets if doing so gives the lenders less security. Also be referred to as a "covenant of equal coverage".(Górski :2005:10) A negative pledge clause is just another way for bondholders to protect their investment. By including a negative pledge clause in a bond indenture, the bondholders of the current bond issue prevent the company from issuing any debt in the future which would jeopardize their current priority claim on the company's assets.

Including a negative pledge cause in a bond indenture increases the safety of the bond issue from the investors' perspective, and therefore often allows the bond issuer to borrow funds at a slightly lower interest rate.

Question 02

The word 'licence' has been defined in section 523 of the Indian Easement Act, 1882 "where one person grants to another, or to a definite number of other persons, a right do or continue to do in or upon the immovable property of the grantor, something which would, in the absence of such a right, be unlawful, and such right does not amount to an easement or interest in the property, the right is called a licence.A license is a contractual right to do something on a property, whereas a lease is a property interest that includes possession of the property, often containing the right to sub-license specified uses of the property. (Becker:2000:187) For example, you could lease a warehouse from someone and have a license to use it as a public storage facility, provided you paid a percentage of the generated income to the landlord.

The lease of immovable property must be made for a certain period i.e., for a definite number of years, or for life, or even permanently. But in licence agreement there is no stipulation as to total time period. However it generally doesn't exceed 5years.

A lease is defined u/s 105 of TP Act 1882 where as a licence is defined in sec.52 of the Indian Easement Act 1882.

(2)According to sec.107 of TP Act, a lease from year to year or for any term exceeding one year can be made only by a registered doccument. According to sec.17(1)d of Registration Act, both lease or licence agreement made for less than one year is not required to be registered.

(3)According to sec.105 of TP Act, a lease of immovable property is a transfer of a right to enjoy property i.e., the possession is always given to the transferee. A licence does not transfer any interest in the property and the licensee has no right to possession.

Question 03

This Act applies to a landlord covenant or a tenant covenant of a tenancy—

whether or not the covenant has reference to the subject matter of the tenancy, and

whether the covenant is express, implied or imposed by law,

Any landlord or tenant covenant of a tenancy which is restrictive of the user of land shall, as well as being capable of enforcement ...