California Law Firm Drops a Bomb on Regus; Claims Unfair Practices

But are they unfair? The answer may be in the fine print…

News has come to light of a pending lawsuit in which a former client is accusing global workspace provider Regus of failing to disclose hidden charges. The accusation throws a spotlight on the importance of reading and understanding business contracts, as well as the issue that clients may not have easy access to the necessary documentation.

All too often parties come to blows over contracts due to simple misunderstandings, be it through clients failing to read the fine print in detail or suppliers neglecting to highlight key areas of information.

This particular case, filed by San Francisco business law firm Ari Law P.C., claims that Regus failed to adequately disclose hidden charges to the client. Under the California Business & Professions Code, the complaint has been raised on the basis of false or misleading advertising which could lead to charges of negligent misrepresentation, intentional misrepresentation, even fraud.

The outcome remains to be seen, but this is an issue that many business center owners and managers are all too familiar with. What is considered a ‘hidden fee’ is usually stated within the contract terms and conditions. But how often are contracts read and properly absorbed? Is the legal documentation accessible enough? Are contracts simply too complicated?

As Joanne Lezemore – senior lawyer at Which? Legal Service – said: “The advice is simple: always read the terms and conditions of any contract before you sign it.”

She added: “It is really important you understand everything before you sign on the dotted line, as you could find yourself landed with extra fees or charges. While all consumer contracts are subject to the unfair terms in consumer contract regulations, this doesn’t mean you can challenge a clause just because you didn’t know it was there, or you think it’s unfair – because it’s clearly written, you’re bound by it.”

The issue here is that clients may not have sufficient access to the relevant documentation. Some clients will argue that they cannot easily get hold of the terms before or during their tenancy. Do they have ample time to digest the details before signing on the dotted line? And do clients have to jump through hoops to obtain the information during their tenancy?

Many written office contracts, such as those used by Regus, refer to ‘House Rules’. This is a set of instructions detailing various expectations of the client, and equally what the client can expect from their office provider. The House Rules are made available upon request. But in the case of Regus, perhaps these rules are too difficult to find? If clients don’t have easy access to the House Rules, combined with a lack of understanding of the content, this could become a catalyst for problems that can quickly escalate.

Given the fast-moving nature of the flexible workspace industry, a significant advantage is that solicitors are generally not required to oversee contract details. In contrast, the conventional office market sees legal parties thrashing out lengthy negotiations long before a signature is within sight. Perhaps the time has come where business center terms must now require a legal representative to assist clients in understanding and signing the contract.

Or perhaps, center owners and managers need to take a few simple measures to save such problems later down the line. For instance:

• House Rules: Make sure your clients are aware of the House Rules and don’t wait for them to ask. Provide a copy either with the contract, via email, or by leaving a hardcopy on their desk.
• Clarity: Why not take a highlighter pen to the contract and show exactly what fees the client is liable for? It will negate any accusations of ‘hidden’ fees and could save a lot of hassle later on.
• Evaluate Your Deal Closure: When it comes to confirming a deal with a new client, perhaps it’s time to evaluate the way you or your representatives closes deals. Make it verbally clear that clients should read and understand the terms, even take time to explain the key areas and exactly what they are liable for.

The case involving Regus is ongoing, but without a doubt it has raised critical issues within business circles and the office industry – concerning inaccessible documents and lack of understanding – that are all too often overlooked.

What measures do you take to ensure clients read and understand the terms? How do you think the case will be resolved?

Joanne Lezemore quote: The Guardian