For generations, “doing business on a handshake” signified trust and integrity between involved parties. 

But in the fast-paced, high stakes world of modern business, contracts for startups and other businesses are essential. One misunderstanding can cost you investors, customers, reputation, or even your business. 

Business contracts offer more than just formality – they are essential foundational documents, giving you a solid backbone that sets expectations between organizations, and protects against risk.

Silicon Valley Technology Law Advisors (SVTech) has served the California Bay Area as a dedicated contract lawyer for businesses for over 25 years. We fully understand the crucial nature of legal contracts for startups and established enterprises of all sizes. 

Today, we're going to look at the top six categories of legal contracts for startups every business owner should know about, why they matter, and how an experienced business contracts lawyer can ensure they work in your favor.  

1. Formation, Ownership and Structure Agreements

The most essential type of legal contract for startups (or any business) is the business entity agreement. This is a foundational contract that defines a company's structure and ownership. Depending on the type of business you have, this may be called the operating agreement, partnership agreement, or shareholder agreement. 

• Operating Agreements: For Limited Liability Companies (LLCs), the operating agreement is the legal document that dictates who owns what, and sets the structure and rules for how the company will run. A business contracts lawyer will help you define roles and responsibilities, and establish the rules for profit-sharing and decision-making

• Partnership Agreements: When two or more partners (or businesses) join together to create a new joint venture, a partnership agreements are required. A partnership agreements attorney will draft a legal contract that will outline the roles of each partner, including their responsibilities, profit sharing, decision making and exit strategies. 

• Shareholder Agreements: When a corporation is formed that issues stock to its investors, a shareholder agreement is used to regulate share voting requirements, stock sale/resale restrictions, vesting terms, and other shareholder rights and responsibilities. 

These formation agreements are essential to the success of a business. They lay out how a business will operate, dictate its strategy, and can even settle disagreements between founders and partners. 

Working alongside a business formation attorney to draft these vital documents minimizes the risk of disagreements and ensures your business is properly set up to thrive.

2. Non-Disclosure Agreements (NDAs)

In the technology industry, your ideas and trade secrets are like gold. As a startup, non-disclosure agreements are essential to keeping your business's unique innovations and trade secrets confidential. 

Whether you're discussing a new idea with potential investors, or keeping your employees accountable, a strong NDA sets the bar for what constitutes confidential information, how long that information must remain secret, and the consequences for breaching the agreement. 

A business contract compliance attorney can help ensure that your intellectual property stays secure with a legally sound and effective NDA. 

3. Vendor Agreements

Nearly all businesses utilize services from other businesses. Whether you are licensing software or purchasing goods from a third party, a vendor agreement is essential to formalize the relationship between you and a third-party supplier or service provider. From raw materials procurement, to software purchasing, these documents define the expectations for both parties, and ensure you get the goods and services you've paid for.

Vendor agreements formalize the contract details including pricing, payment terms, delivery schedules, termination clauses and liability limitations. Vendor agreements often include licensing and Service Level Agreements (SLAs) that promise things like uptime and data security requirements. 

A vendor agreement lawyer will help you draft agreements with favorable terms that protect your company interests throughout the contract.  

4. Licensing Agreements

A licensing agreement is a specific type of contract where one party, the licensor, grants permission to another party, the licensee, to use their intellectual property. These greatly vary in form and type and are crafted to uniquely support the revenue model chosen by the licensor.

A licensing agreement will define which assets a party is allowed to use, such as software, code, patents, or trademarks. The licensing agreement will also stipulate how the licensed asset is allowed to be used, and even what geographic locations its use is permitted. 

Licensing agreements can be exclusive or non-exclusive, and can also cover intangible assets, such as software code, logos, and media. 

Whether you are seeking to license an asset, or considering licensing your assets to another party, it is vital to work with a contract negotiation lawyer. They will help you establish a licensing arrangement that supports your revenue model and protects your business against misuse and unintended consequences with respect to your intellectual property. 

5. Employment and Independent Contractor Agreements

Employment contracts are a vital part of any business, but can be particularly important legal contracts for startups. Misclassification of employees is a big risk for startups. A contract negotiation lawyer can help you determine whether to hire employees full time, or work with independent contractors, and create the appropriate documents to help you clearly define job roles, compensation/commission plans, and benefits.

Employment contracts and independent contractor agreements are also vital for tax purposes. Employees and independent contracts are classified differently for tax purposes. Working with a business contracts lawyer will help you differentiate between the two, and ensure that you are in compliance with state and federal labor laws. Misclassification can lead to penalties, back taxes, and can even put you at risk of expensive and disruptive wage and hour lawsuits. 

Employment contracts and independent contractor agreements are also essential to ensure your company owns your intellectual property, and ensure that former employees or contractors keep your intellectual property and trade secrets confidential even after they end their relationship with your organization.  

6. Channel, Referral, or Reseller Agreements

Lastly, an extremely common and important type of contract in the technology industry is the channel, referral, or reseller agreement. 

This type of contract outlines the relationship between your business and a third party who helps sell your product or service. 

They define the terms of the partnership, protect both parties, and ensure your brand is represented correctly. These contracts determine commission rates, marketing responsibilities, and territory rights. 

Working in these relationships without a clear contract can create misunderstandings and lost revenue, even brand damage. Working with a contract negotiation lawyer to draft these complex agreements is essential. A lawyer will help you avoid potential issues and gain favorable terms in building a successful and secure distribution agreement. 

Why You Need a Business Contracts Lawyer

Now that we understand the top 5 legal contracts for startups, let's discuss why a business contracts lawyer is essential. 

Many startups are tempted to save on the cost of working with a contract lawyer for businesses by using generic templates. 

But that is a crucial mistake. 

Generic contracts are unlikely to comply with your specific state's laws, nor take into account your specific industry. They may be missing critical provisions that you need to secure your interests, and may not even be legally enforceable in court. Nor does a generic contract consider your other agreements –  and may even contradict them. 

Contracts aren't just paperwork – they write the rulebook for how your business operates, both directly and with other parties.

Working directly with a business contracts lawyer is the only way to guarantee that your vital contracts are tailored specifically to your business, are legally enforceable, and compliant with relevant state and federal laws. 

With your business's security, reputation, and success at stake, why settle for anything less than the knowledge of an experienced business contract review attorney?

Why Choose SVTech as Your Business Contracts Lawyer?

Choosing the right contract lawyer for your business is an important decision. At SVTech, our decades of experience will help you lay a foundation for the growth and stability of your startup or established business. 

SVTech offers:

1. Contract Drafting and Reviews: As your business contract review attorney, we will prepare contracts from scratch, and review existing agreements to ensure they are legally sound.

2. Negotiation Support: Our 25 years of experience will help you negotiate favorable terms, while keeping a positive relationship with your partners.

3. Compliance: We will serve as your business contract compliance attorney making sure that your contracts are compliant with state and federal law, as well as regulations specific to your industry. 

4. Risk Mitigation: We've seen and done it all, and our experience will help you identify potential issues and avoid unnecessary disputes and litigation.

5. Lasting Legal Partnership: As your business grows, we continue to work alongside you as your legal partner and update your contracts accordingly. 

Our contract strategy is comprehensive, providing you with the peace of mind that your contracts are compliant, favorable, and secure. 

SVTech: Your Trusted Business Contracts Lawyer 

Whether you are launching a budding startup, or running an established enterprise, working with a business contracts lawyer ensures that your vital agreements are legally sound, enforceable, and tailored to your needs.   

SVTech is here to help you navigate business contracts with confidence knowing that your interests are in good hands. Don't settle for a generic contract template that can jeopardize your success. Partner with a proven ally who is ready to take your business's legal contracts into capable hands. 

Contact SVTech today for a confidential, no-obligation consultation and let us help you secure your business's legal future today. 

**Disclaimer**

The information provided in this blog post is for informational purposes only and does not constitute legal advice. Please consult with a qualified attorney to address your specific legal needs.