License agreements ensure that you have legal permission to use another person`s property or company. For example, if you were using an artist`s song in an advertisement, you would have to sign a license agreement to do so legally. If you use the song without permission, you may violate copyright law and risk being sued or fined. Licensing agreements cover a wide range of known situations. For example, a retailer could enter into an agreement with a professional sports team to develop, produce and sell merchandise bearing the sports team`s logo. Or a small manufacturer may allow a production technology owned by a larger company to gain a competitive advantage instead of having to spend time and money developing its own technology.