8 ESSENTIAL CONTRACTS EVERY STARTUP NEEDS

8 ESSENTIAL CONTRACTS EVERY STARTUP NEEDS

Many founders believe that legal documentation can wait. They are wrong.

A single vague or ambiguous clause—or the absence of a critical clause—can jeopardize everything you’ve created. Whether dealing with an investor, co-founder, supplier/vendor, employee/contractor, or the public, contracts are your primary safeguard and first line of defense.

These are the 8 vital contracts every startup should have:

1. Founders’ Agreement

They matter because: They align equity, define roles, establish ownership of intellectual property (IP), and outline exit strategies.

They help avoid: Potential conflicts that could fracture the company.

2. Non-Disclosure Agreements (NDAs)

They matter because: They shield your ideas during preliminary discussions.

Use them with: Prospective hires, collaborators, and investors before divulging sensitive and confidential information.

3. Employment and Contractor Agreements

They matter because: They specify responsibilities, safeguard IP, and prevent misclassification.

Be sure to include: Non-disclosure agreements (NDAs), non-compete clauses (if permitted by law), and IP assignment terms.

4. Sales or Service Agreements

They matter because: They clarify payment terms, delivery schedules, and liabilities.

They protect against: Scope creep, late payments, and disputes.

5. Supplier or Vendor Agreements

They matter because: They ensure reliability and accountability in your supply chain.

Essential clauses: Deadlines for delivery, payment terms, penalties, and mechanisms for dispute resolution.

6. Terms of Use

They matter because: They create the legal framework for the use of your website or app.

They protect against: Misuse and unclear customer responsibilities.

7. Privacy Policies

They matter because: Businesses must comply with privacy and data protection regulations (e.g. EU and UK GDPR, CCPA, PIPEDA).

They protect against: Complaints, fines, and lawsuits for failing to ensure people's privacy or protect their data.

8. Investment Agreements (Convertible Notes, SAFEs, or Equity)

They matter because: They set out terms related to investor capital, such as valuation caps, discounts, and liquidation preferences.

They protect against: Loss of control of your company.

FOOD FOR THOUGHT

Bad contracts can ruin you. Don’t copy/paste your legal foundation. Build it correctly from the start.