boston-legal-season-five-posterWhenever it comes to contracts the law in each country is very different, for coworking space contracts and agreements and for everything else. The best alternative is to work with a lawyer firm, but it is expensive and not available to everyone. Even if you can afford it, you should always do your homework and learn as much as you can. The lawyers are going to ask you what you want covered in the document anyway, and the less creative work they have to do the best they can concentrate on what is in the current contract and the cheaper it will be for you.

The best option is for you to talk with other entrepreneurs, with entrepreneurs’ associations, with government agencies or university departments that could help you, and to check how other businesses (even better if they are coworking spaces) are doing it. There are lot of people out there helping small businesses, and a lot of legal documents available from the websites of many companies.

One of the many advantages of running a coworking space is that there will be many entrepreneurs among your coworkers. Ask them for examples and for advice!

Be smart with your cut and paste, understand what you are using and change the names.

Keep in mind that just because it is not written it does not mean you do not have a contract, but if it is written it is much easier to prove the existence of the contract and to refer to it in case of any discrepancy.

The most common contracts and agreements that you will probably deal with are:

  • The constitution of your business as a legal entity. This changes from country to country, in some you need a notary, in others you just have to pay a small fee and fill a form. Try to see if there’s an entrepreneurs association or a government agency that can help you understand the differences, obligations, advantages, etc.

  • Partners agreement. It defines who does what, how are decisions taken, what happens if somebody leaves or cannot work (eg: the CEO goes into a coma and cannot continue his job), how do you vest the stock of the company, how can the stock be sold, how can new partners enter in the business, how can the partners leave, etc. When you are starting a business everything is rosy and awesome, but things can go wrong for many reasons (most of them legitimate). It is not a matter of not trusting each other, it is a matter of making everything clear from the beginning, to make it easier on yourselves if anything goes wrong. When things get ugly it is extremely difficult to agree on anything, better to prevent. Also, if one of you owns the brand (trademark or copyright) the conditions to use it should be stated here.

  • Lease, sale of the space, or shared revenue agreement with the landlord. Be careful with these, they are very important for your future. Make sure that in any case you can open your business without any special permissions and if you need to get them figure out the time it will take and the probability of not getting it. You can always include clauses that will void the contract in case something does not happen, like getting that permit, securing a loan or the funds for the business, finishing repairs, etc. Find out how far does your personal liability and that of your company extend.

  • Terms & Conditions, membership forms. Your contract with the users of your space. Be clear, concise, and make sure to include a reference to its changing nature. You will be improving it and changing things over time. Most of your clients will go through them before signing up. Depending on your legislation and your personal preferences their acceptance when signing up may suffice. If not, you will have to put them on paper and have them sign it as a membership form.

  • Special conditions for the organization of events. Sent to the organizers, even if it is a free event that you are sponsoring: you want to make sure they understand they are responsible if anything breaks or there’s an issue.

  • Personnel contracts. Very tricky, make sure you have some good references and that you understand them well.

  • Insurance. There’s not much that you can change here. Make sure you comply with local regulations and understand what is covered and what is not. Unless you are obliged by law, do not insure the property of the coworkers: they should care for their own equipment and for the grand majority it is not worth it.

What is your experience with contracts and agreements? How would you recommend others to proceed? What is that one thing you absolutely wished you knew before?