In Part 2 (see Part 1 for freelancers and consultants here) of our contribution to #includedTips, we are focussing on tech companies.

There are 5 key contracts that tech start-up companies should put in place to avoid disputes later.

Shareholder Agreement & Articles of Association

If you have set up a limited company you will need a shareholders’ agreement and articles of association put in place. These documents regulate the arrangements agreed between you and your shareholders. If there are other shareholders you need to agree and write down who owns the shares and in what amounts. You will need to set out the detail on how shares can be bought and sold and how decisions are made. You need to decide who are going to be the directors and whether they will be paid and if so how much. If you do not detail all of these arrangements are the start then disputes can arise at a later date over when shares can be sold, at what price, how many shares a party is entitled to. In addition, if you loan money to the company you should also sign a loan agreement setting out when you are to be repaid and the terms.

Contracts with customers

As you will be selling products or services you will to put in place documents to cover your agreements with your customers. If you trade online, you will need website terms and conditions of trading and website usage terms and conditions. If you are selling to customers who are consumers you will also need to comply with consumer regulations. If you are selling business to business then you may need to enter into more detailed long term supply agreements. You need to make sure that you clearly set out payment terms, delivery terms, product warranties, refunds and a wide range of other matters. If you do not clearly set out the basis on which you are contracting with your customers then you are likely to end up with disputes over key contract terms.

Software Agreements

Software is protected by intellectual property rights (IPR). This means that in order to use software a licence is required from the owners of the IPR. If you are designing software and/or apps for customers or are purchasing software and apps from third parties to use in your business you will need a software development agreement or licence put in place. Often there are disputes over what was the exact scope of the project, what the design was meant to cover, who was meant to provide the information and content and by what date, what the services specification was exactly meant to cover and what were the development milestones. It is, therefore, key to put in place contracts that clearly set out the detail on these matters as well as detail such as the payment terms and price.

Agreements with suppliers and/or partners

Depending on what type of tech business you have set up you may need a range of contracts from supply agreements, manufacturing agreements, distribution agreements, agency agreements and/or licensing agreement. Whoever your business deals with it will need a contract put in place to cover that arrangement. These types of contracts should cover price, payment terms, delivery, standards for services and products, timetables, responsibilities, exclusivity, termination and a range of other matters. If you don’t take the time at the start to document these arrangements you will be potentially storing up issues for disputes later down the line. Emails exchanges and verbal agreements can seem unclear at a later date and it is easy to forget or misinterpret these arrangements if they are not clearly documented.

Non-Disclosure Agreement

Your business ideas, copyrights, patents, software and financial information are your crown jewels. They make your business valuable. This information can easily be copied or used by someone else if you do not keep them confidential. When you are speaking to other business and customers it is useful to put in place NDA’s. You should not disclose your crown jewels without having an NDA in place. An NDA offers you some protection in relation to the information you disclose. You may not ever want to go through a court case to enforce it, but having a signed NDA is an expression of intent and goodwill by both parties and a deterrent against disclosure of confidential information.

There are many other agreements that you are likely to need to put in place but this blog lists those contracts that we believe should be in your top five agreements.