Launching a startup is exhilarating, but before the excitement completely takes over, remember the legal foundation: contracts. These written agreements protect your business, ensure clarity, and prevent future headaches. But contract law can seem like a foreign language, especially for new entrepreneurs. Don’t worry, we’ve got you covered! Here are some essential contract tips to navigate the business world with confidence:

  1. Understand the Basics:
  • Offer & Acceptance: Ensure a clear offer from you and express acceptance from the other party. No verbal “handshakes” or implied agreements – put it in writing!
  • Consideration: Exchange something of value, like services, goods, or even promises. Not everything needs a hefty price tag, but both sides should contribute.
  • Mutuality of Obligation: Both parties have responsibilities. Define them clearly to avoid confusion and potential disputes.
  • Capacity: Make sure everyone involved has the legal capacity to sign, meaning they’re of legal age and sound mind.
  • Legality: The contract shouldn’t violate any laws or regulations. Stay on the right side of the tracks!
  • Written Agreement: While oral contracts exist, a written document provides concrete proof and avoids misunderstandings.
  • Signature: Signatures from all parties solidify the agreement. Use electronic signatures for convenience if legally valid.
  1. Know Your Contract Types:

Not all contracts are created equal. Familiarize yourself with common types relevant to startups:

  • Non-Disclosure Agreements (NDAs): Protect confidential information during discussions with potential investors, partners, or collaborators.
  • Service Agreements: Clearly define the scope of work, deliverables, timelines, and fees for freelancers, contractors, or agencies.
  • Employment Agreements: Outline employee roles, responsibilities, compensation, and termination clauses.
  • Founders’ Agreements: Set expectations and ownership stakes between co-founders to avoid future conflicts.
  1. Don’t Go It Alone:

While understanding the basics is crucial, legal complexities can arise. Consulting a lawyer for important contracts is highly recommended. They can:

  • Draft tailored agreements: Ensure your contracts are legally sound and address your specific needs.
  • Negotiate effectively: Protect your interests while securing mutually beneficial terms.
  • Explain legal jargon: Demystify confusing clauses and ensure you understand every aspect.
  • Prevent future disputes: Minimize legal risks and potential headaches down the line.
  1. Essential Clauses to Consider:

Even with basic contracts, don’t forget these key clauses:

  • Termination Clause: Define how either party can end the agreement under certain circumstances.
  • Confidentiality Clause: Protect sensitive information exchanged during the collaboration.
  • Dispute Resolution Clause: Establish a process for resolving disagreements outside of court, saving time and money.
  • Intellectual Property Clause: Clarify ownership and usage rights of any created intellectual property.
  1. Be Proactive and Informed:

Contracts are not just legal documents; they’re vital tools for protecting your business interests. By understanding the basics, knowing your contract types, and seeking professional guidance when needed, you’ll navigate the startup world with confidence and ensure smooth sailing for your entrepreneurial journey.

Remember: This article provides general information and shouldn’t be considered legal advice. Always consult with a qualified lawyer for specific contract needs and legal guidance.  Use to form below to contact us today!


To learn more or get a legal review of a contract, complete the form or call +1(603) 227-0525, to Reach Aaron.

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