Four Contracts That Start-Ups Should Know About
When it comes to contracts, every business is different. Working with an attorney can help make sure that you’re putting together agreements that fit your business model and structure and further your business’s goals.
There’s often more than one way to accomplish a particular result, and it’s not uncommon for businesses to mix and match language from different types of agreements in order to tailor the transaction to their specific needs. In the end, the name that gets placed at the top of a contract is less important than the substance of the terms the parties agree upon.
All that said, there are several important categories of contract that are worth thinking about for new businesses
Whether it’s in the form of a Partnership Agreement or a Joint Venture Agreement or an Operating Agreement, it’s crucial to have some kind of agreement in place from the very start that spells out what each partner or co-founder will be contributing to a business, what their respective liabilities are, what they’re entitled to and how decisions in the course of the business will be made.
It might be called a services agreement or a contractor agreement or something more specific like a software developer agreement or a sales representative agreement. Whatever form it takes, it’s helpful to have some contract in place before an individual or enterprise undertakes to perform some service on behalf of another.
At its most basic, the agreement should say what the service provider is being engaged to do and how she or he or it will be compensated. However, there are a number of other important issues to consider. It’s common for such contracts to include provisions concerning the ownership any intellectual property that arises out of the services. There is the question of liability and indemnification: who is responsible if something goes wrong? How long will the agreement last? Under what circumstances can the parties terminate it?
Many of these same issues can also show up in the context of employment agreements and partnership agreements.
It is sometimes desirable for a business to share confidential information with another business or individual. This information can be protected by a Non-Disclosure Agreement (or NDA), sometimes called a Confidential Disclosure Agreement (CDA) or simply a Confidentiality Agreement. Generally, an NDA requires one party (or both in the case of a mutual NDA) not to disclose any confidential information that they learn to others or use the confidential information except in the limited circumstances contemplated by the agreement.
NDAs are very common when parties are first negotiating a possible partnership or services or licensing agreement. They are sometimes also embedded as a confidentiality clause within those other agreements.
Licensing is a great way to monetize intellectual property, scale a business and/or form a strategic partnership. A license is simply permission to use someone's intellectual property: their patented inventions, copyrighted content, trademarked brands or just general proprietary information and knowhow.
Licensing Agreements should set forth exactly what it is that’s subject to the license, what the licensee is being permitted to do, how long the license will last and under what circumstances it might terminate, what markets and jurisdictions the license extends to, what other restrictions and conditions are placed on the licensee, and what the licensor will receive in return for granting the license.
Knowmad Law routinely prepares NDAs, licenses, services agreements and other business contracts. Give us a call at or send Chris an email at email@example.com, and we’d be happy to discuss your legal concerns.