A license provides the legal authority to engage in certain acts. Some licenses are required for the protection of the public. For example, a physician is licensed to assure professional competence, and the owner of a bar and restaurant is licensed to prove moral fitness. Some licenses are designed to raise government revenue (e.g., automobile licenses) or to grant some other party permission to make use of land (e.g., land easement). In business, a license is the granting of permission to use a property right in a limited capacity, while still allowing the licensor to retain ownership. For example, under a licensing agreement a U.S. clothing manufacturer may allow a foreign producer to use its designs and specifications to make clothes.

For a license to exist, there must be a contract between two or more parties giving an explanation...