My question involves real estate located in the State of: Florida
Experts, speak to me of "Consideration," and how it would apply in an instance of a verbal/informally written lease agreement.
Our start-up company planned to lease a business space for a one year term. This space consisted of a smaller portion that traditionally is then subleased out to customers on a shorter term basis. (i.e.: Salon space and renting out chairs). Due to the perceived risk of our infant company, we formed an agreement with the owner wherein he would agree to lease us the space, provided we could substantiate our ability to afford the annual lease. The understanding was that we would do so by securing the sublease first, essentially "pre-leasing" the sublease space to one of our clients to guarantee the fund availability for the main lease. If/when this was validated by the owner and more importantly, his attorney, he would then grant us the lease. This agreement was discussed several times in person amongst other business partners, and particularly via e-mail where the owner requested a summary of the business plan and process to forward to his attorney for approval. (Subsequently, it was in fact approved, complete with a clause written in to the drafted lease granting the permission to sublease.)
Unfortunately, as we were awaiting the approval, an issue arose where our "legal" authorization and right to sublease the property was challenged, citing the fact that we did not have the annual lease in place before subleasing the space out, despite the agreement with the property owner. Adding to the mess, I currently have two different business attorneys telling me two different things; the first obviously being that one can clearly see based on all of the written communications with the property owner that we were well within our rights to proceed as we did. On the other hand, another very assured fellow saying that the only thing that matters to the Court is what the law says, and the law makes whatever agreement we had with the property owner an informal negotiation, not a binding agreement - based on the fact that there was NO CONSIDERATION, and therefore no title. He goes on to state that this consideration means money only, and because we had not gotten to the state of exchanging funds and signing the main lease, this will only end in defeat for us.
Having a difficult time believing that the property owner (who is a realtor himself) and his attorney would permit an agreement so far outside the law, I Googled "consideration" in the legal sense, and came up with the following legal definition: Something of value given or promised by one party for the promise of another. Valuable consideration can include money, work, performance, assets, a promise, or abstaining from an act. Additionally, the definition goes on to state that both "Valuable consideration" (money or a promise of something that can be measured in terms of money), and "Good consideration" (a promise that cannot be measured in terms of money, such as love and affection) are sufficient to enforce a contract; that the law typically does not concern itself with the fairness of consideration, that what is exchanged need not have the same measurable value, and that the law will accept that the parties thought the consideration to be fair because they freely agreed to the exchange.
Therefore, does the owner's promise to lease us the space in exchange for a) our promise to provide proof of a sublease/funds, and b) our promise to perform thereafter NOT constitute a valid form of Consideration? While no money had changed hands just YET, that was strictly due to the designated order of steps that had to be taken to be approved. Nevertheless, these promises were exchanged and acted upon with the intent of following through, right up until the point of challenge. Will a Court not recognize this?
Experts, speak to me of "Consideration," and how it would apply in an instance of a verbal/informally written lease agreement.
Our start-up company planned to lease a business space for a one year term. This space consisted of a smaller portion that traditionally is then subleased out to customers on a shorter term basis. (i.e.: Salon space and renting out chairs). Due to the perceived risk of our infant company, we formed an agreement with the owner wherein he would agree to lease us the space, provided we could substantiate our ability to afford the annual lease. The understanding was that we would do so by securing the sublease first, essentially "pre-leasing" the sublease space to one of our clients to guarantee the fund availability for the main lease. If/when this was validated by the owner and more importantly, his attorney, he would then grant us the lease. This agreement was discussed several times in person amongst other business partners, and particularly via e-mail where the owner requested a summary of the business plan and process to forward to his attorney for approval. (Subsequently, it was in fact approved, complete with a clause written in to the drafted lease granting the permission to sublease.)
Unfortunately, as we were awaiting the approval, an issue arose where our "legal" authorization and right to sublease the property was challenged, citing the fact that we did not have the annual lease in place before subleasing the space out, despite the agreement with the property owner. Adding to the mess, I currently have two different business attorneys telling me two different things; the first obviously being that one can clearly see based on all of the written communications with the property owner that we were well within our rights to proceed as we did. On the other hand, another very assured fellow saying that the only thing that matters to the Court is what the law says, and the law makes whatever agreement we had with the property owner an informal negotiation, not a binding agreement - based on the fact that there was NO CONSIDERATION, and therefore no title. He goes on to state that this consideration means money only, and because we had not gotten to the state of exchanging funds and signing the main lease, this will only end in defeat for us.
Having a difficult time believing that the property owner (who is a realtor himself) and his attorney would permit an agreement so far outside the law, I Googled "consideration" in the legal sense, and came up with the following legal definition: Something of value given or promised by one party for the promise of another. Valuable consideration can include money, work, performance, assets, a promise, or abstaining from an act. Additionally, the definition goes on to state that both "Valuable consideration" (money or a promise of something that can be measured in terms of money), and "Good consideration" (a promise that cannot be measured in terms of money, such as love and affection) are sufficient to enforce a contract; that the law typically does not concern itself with the fairness of consideration, that what is exchanged need not have the same measurable value, and that the law will accept that the parties thought the consideration to be fair because they freely agreed to the exchange.
Therefore, does the owner's promise to lease us the space in exchange for a) our promise to provide proof of a sublease/funds, and b) our promise to perform thereafter NOT constitute a valid form of Consideration? While no money had changed hands just YET, that was strictly due to the designated order of steps that had to be taken to be approved. Nevertheless, these promises were exchanged and acted upon with the intent of following through, right up until the point of challenge. Will a Court not recognize this?
Land Rights: Consideration and an Informal Lease Agreement
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