9 types of contracts for a startup and how to manage them

Founders should keep on top of their contracts right from the start. They provide a legal framework that outlines the rights, obligations, and expectations of all parties involved, including founders, investors, employees, and partners.They help streamline operations and ensure  compliance with legislation. 

Below are 9 key contract types a startup will usually need at one point along their journey and how they can manage all of them with a contract management platform.

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1- Agreements of incorporation

When incorporating a company, an agreement typically refers to the legal document known as the "Articles of Incorporation". This outlines the fundamental details of the company, such as its name, purpose and share structure.

The following are examples of types of agreements based on the type of company: 

• Founder(s) agreements: This agreement establishes the rights, responsibilities, ownership and liability of the founder(s). This helps prevent disputes and helps address key issues within the startup.
• Sole proprietorship agreement: The business is operated by one individual who is solely responsible for all liability.‍
• Shareholders agreements: The shareholders (or members) in a private limited company will have an agreement that stipulates that the company is a separate legal entity from its owners and protects them from liability. ‍
• Partnership agreement: If the startup is entering into a partnership or joint venture with another entity or person, partnership agreements establish a framework of the terms, obligations, and expectations.

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2- Intellectual property agreements

The founder(s) of a startup should obtain full written ownership of all intellectual property assets. This may include copyrights of content and patents to protect company ideas and intellectual property portfolio.  For example, Legislate, a contract management platform obtained their second patents for their knowledge graph technology.

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3- Non-disclosure agreements (NDAs)

NDAs protect confidential information shared with employees and investors. This agreement ensures that parties involved are legally bound not to disclose or misuse confidential information.

There are two types of NDAs:

• Mutual NDA: A mutual NDA is used when both parties disclose confidential information with each other but not to third parties. This type of NDA is often used in situations where two companies are exploring a potential partnership or merger.
• Unilateral/one-way NDA: A unilateral NDA is used when only one party will disclose confidential information. One-way NDAs are often used for potential investors, employees and consultants. 

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4- Employee contracts and consultant contracts

Employee contracts include the responsibilities, rights and duties between employees and employers. The contract will also include specifics to salary bracket, benefits, bonuses, retirement and insurance packages, etc. It is important that an employer provides their employees with a contract to protect both parties. 

If certain employers are also based abroad they may be entitled to an international employment contract to reflect the local laws and legislations. 

Independent contractors or consultants will also require a contract specific to the needs of the business e.g. software developers or sales consultants. 

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5- Investment contracts

Startups who seek funding from investors will need to enter into an agreement to determine the terms and conditions between them. These agreements include the investment terms such as the amount invested, ownership, the relevant board, investor rights, etc. 

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6- Commercial lease contracts

If a startup chooses to work from a separate or shared office space they will need to enter into a commercial lease agreement. 

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7- Privacy and data protection agreement

Protecting company assets is important for a startup, but for the clients using the service or product they will also need a guarantee that their data is protected. For example, privacy policies and GDPR data processing agreements provide customers control over their personal data, its collection and use.

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8- Purchase order agreements 

Most startups will purchase and sell products and services. A purchase order is a document which contains information such as descriptions of the product(s), purchase and arrival dates, and costs. 

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How to manage all startup contracts?

Contract management platforms like Legislate streamline and automate all aspects of the contract process. Founders can centralise, create, manage, and track contracts throughout their lifecycle. Book a demo today to make contracting more efficient. 

The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.