Serviced Office Agreement (P125)

This document is a form of agreement for short-term occupation of accommodation which is fully equipped by the owner and ready for use. Such arrangements are essentially temporary, and a licence rather than a tenancy will usually be appropriate.

The characteristic of a licence is that it does not grant the occupier exclusive possession in contrast to a lease which does, although there have been exceptions. This Licence expressly declares that the Licensee does not have exclusive possession.

As a general rule:

• the grant of exclusive possession,
• for a term,
• at a rent,

will create a tenancy rather than a licence.

The differences between a lease and a licence matter a great deal.

In relation to business tenancies, leases are generally protected by Part II of the Landlord and Tenant Act 1954. This means that when the contractual term of the business lease comes to an end, the tenant’s right to occupy the premises continues and (subject to other requirements in the 1954 Act), a landlord would not be able to recover possession of the business premises unless a notice procedure has been complied with and one or more of a limited number of grounds of possession has been established.

A licence, on the other hand, does not give any protection to the licensee: you have no right to renew a licence once the landlord asks you to leave.

Our comments on the specific clauses of the agreement are set out below.

DATE AND PARTIES

For you to complete.

1. DEFINITIONS

These need to be completed according to the particular circumstances of your contract.

2. THE LICENCE

This Clause sets out the purpose of the contract. It recites that the Licence does not give the Licensee exclusive possession of the premises and that the Licensor is entitled to enter and use the premises at any time.

3. LICENSEE’S UNDERTAKINGS

These Clauses set out the Licensee’s obligations to pay the licence fee and a deposit to cover breakages and damage. It also sets out the Licensee’s obligations regarding his use and occupation of the premises.

4. LICENSOR’S OBLIGATIONS

This Clause recites the obligations of the Licensor to provide the facilities and services unless prevented by matters beyond his control.

5. TERMINATION

This Clause allows the Licensor to terminate the agreement in certain circumstances.

6. NOTICES

This document includes a short form notice clause. Notices must be in writing and do not include fax or e-mail.

7. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

This Clause sets out that the provisions of the Contracts (Rights of Third Parties) Act 1999 will not apply to this Licence. (This Act allows the parties to a contract to confer rights on third parties so that a third party may enforce the contract as if he were a party to it.)

SCHEDULE

The Schedule summarises the rights being granted to the Licensee. You will need to vary this depending on the circumstances. As Licensor, you may also want to provide for some services at an extra charge – e.g. use of photocopier, or use of a conference room etc.