Property Law

Co-Working & Shared Office Space

Contractual Disputes resolutions for start-ups, scale-ups and the entrepreneurially spirited

Many of our clients’ first foray into property is via occupation of a co-working/shared office space. In fact Ignition’s first office was in a co-working environment.

We understand the attraction of these spaces, they are usually fitted out and ready to go often to a very high specification, with a lot more services such as a café, meeting rooms, reception, administration, and security that a small enterprise may otherwise be unable to afford. However, the terms of the licence agreements used for these spaces are often very onerous and rarely offer the flexibility that occupiers expect. We would always advise seeking advice on the terms of any such licence before signing.

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Legal Considerations

Is there a valid contract?

A contract does not need to be written to be enforceable (except in certain situations eg transfer of land or assignments of IP), though it helps to have the precise terms in writing so that each party is aware of their obligations.
In order for a contract to be valid, it must have the following elements:

1. Offer - This is a statement of terms by which the offeror agrees to be contractually bound

2. Acceptance - The offer must be accepted, and acceptance of an offer must be unconditional

3. Consideration - Each party must exchange something of ‘value’ for a contract to valid. The consideration doesn’t have to be equal, but a contract will not be valid without some consideration.

4. Intention to create legal relations – It must be clear that the parties intend to create legal relations and are aware of their obligations

5. Certainty of terms - In order for a contract to be binding, all material terms must be agreed. If the agreement is uncertain, a court may not be able to enforce it

Terms

The terms of a contract can have differing statuses. Conditions are the most important terms of the contract. A breach of a condition will entitle a party to terminate the contract and claim damages whereas a breach of a warranty will only entitle a party to claim damages.

The contract may set out whether the term is a condition or warranty, or it may be designated in statute (eg Sale of Goods Act 1979). If there is no express classification in the contract or statute, the court will consider the nature of the contract, its subject matter and the surrounding circumstances in determining whether the term is a condition or warranty.

It is also possible to imply terms into a contract, in addition to the terms which are expressly stated. Terms can be implied on the basis of usage or custom, previous course of dealings, the intention of the parties, common law, statute and to give business efficacy. You cannot imply a term if it directly contradicts an express term.

Breach of contract

Any loss that is suffered must be a direct consequence of the breach of contract and have been reasonably foreseeable by both parties at the time the contract was entered into.

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Other factors to Consider

There may be within the contract a dispute resolution process which you need to follow. This could include a party sending a notice setting out the breaches and requiring the other party to remedy the breaches within a certain period.
If the breaches are not remedied there may be an arbitration clause which applies to the dispute and that process would need to be followed.
A claimant will have a duty to mitigate their loss.
If you are faced with an insolvent debtor, can you rely on a retention of title clause? This operates so as to ensure title to the goods doesn’t pass until full payment has been received so can give you priority over secured and unsecured creditors.
Has liability been successfully excluded or limited?
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