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Startup Agreements Review: Core Agreements, Review Process

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What is Startup Agreements Review?

Startup agreements are legal contracts businesses use. They establish ownership while managing working relationships with employees or other parties.

If you’ve got startup agreements you need for setting up your business, you should get them reviewed to ensure they’re in order and legally valid.

Read the rest of this article to explore how to review startup agreements, what to look for, and how a qualified lawyer can provide an in-depth legal review to prevent costly mistakes while protecting your interests.

What are Core Startup Agreements?

There are various startup agreements, such as:

  • Founders’ agreement. This document outlines the roles and duties of founders, as well as what happens if a founder leaves the company.
  • Non-disclosure agreement (NDA). This serves to protect confidential and sensitive business information to maintain the company’s reputation.
  • Shareholders’ agreement. This explains how the business is managed and how shares are handled, such as what transfer or selling processes are used.
  • Employment agreement. When staff is hired by the company, an employment agreement will specify their job duties and how they will be compensated.
  • Intellectual property (IP) assignment agreement. This outlines how work created by contractors or founders is transferred to the startup.
  • Vendor agreement. Since startups usually need vendors for various services, such as marketing, vendor agreements serve to define their working relationship, clarifying terms such as deliverables and responsibilities.
  • Terms of service. If digital platforms or websites are used by the startup, they’ll require this document to explain the relationship between the company’s offering and its users.

How Do You Review Startup Agreements?

There are important things to look for when reviewing startup agreements. Here's a rundown of some of them.

Start with the Basics

Go through the entire document, reading every section. Avoid skimming through certain clauses as risks could be hidden in plain sight. If there’s anything you don’t understand, make a note of it.

Confirm all Details

Run through the agreements again, this time checking them for details such as parties’ or companies’ names, numbers and pricing terms, and definitions. These should be consistent throughout individual documents and across startup agreements to prevent misleading information.

Assign IP Correctly

You should check that IP is properly assigned to the corporate entity. Flag any vague wording that can result in ownership confusion, resulting in disputes.

Evaluate Control and Authority

You want to check startup agreements’ voting rights and who has the authority to make decisions so that power is properly allocated in the company.

Protect the Company from Risks

It’s essential to check clauses related to warranties, indemnification, and limitations of liability so that the startup company isn’t unfairly exposed to risks that can result in litigation or financial losses.

Check Legal Compliance

No matter what startup agreements you’re reviewing, always check that they’re aligned with the relevant laws and regulations in the business’s jurisdiction. The laws will sometimes vary depending on the type of agreement. There are also industry standards and regulations to consider.

Seek Clarification Before Signing Agreements

If you’ve made notes of anything you don’t understand or which could be clearer in the documents, now’s the time to question it. Ask the other parties involved in the agreements to provide clarification. This will prevent future disputes that can arise from misinterpretations.

Verify Execution Requirements

You should check to confirm that all startup agreements are executed properly, such as by having all parties’ signatures, being notarized, and having corporate approvals. The execution requirements will vary depending on the type of agreement and what specific rules apply.

How Does a Lawyer Assist with Startup Agreements Review?

Hiring a lawyer to conduct a legal review of your startup agreements will help you feel confident to sign them. Lawyers are experienced in working with startup agreements, guiding you through the review process so that they protect your rights and interests.

A lawyer will help you during the review process by:

  • Checking the agreement for legal risks and unfavorable terms so that they can be addressed before you sign the agreement.
  • Explaining complex provisions so that you can understand everything in the agreement and prevent confusion.
  • Evaluating the agreement for any missing clauses that should be included.
  • Protecting IP ownership and licensing rights.
  • Assessing liability and risk allocation so that it’s balanced and reasonable.
  • Negotiating clauses with the other party and making changes to settle on mutually-favorable contract terms.
  • Complying with all the applicable laws and regulations to reduce the risk of legal disputes.

A lawyer can also draft startup agreements should this be required.

Where to Find a Lawyer for Startup Agreements Review

If you need to hire a lawyer to help you review startup agreements, finding a lawyer doesn’t have to be a costly or time-consuming process. On online legal platforms, you can conveniently access a network of qualified lawyers who are experienced to help you.

ContractsCounsel is one of the largest online legal marketplaces that enables you to connect with a curated network of vetted lawyers. Since all lawyers on the platform are experienced and have contract-reviewing and drafting expertise, requesting that one of them reviews your agreements is easy.

Here are the steps to follow if you want to

  1. Go to the ContractsCounsel marketplace.
  2. Post your project for free. Include a few details to help you find the most suitable lawyer, such as specific documents you want reviewed or any specific concerns you have regarding the agreements.
  3. You’ll receive multiple bids from lawyers directly on the platform.
  4. Before selecting one, review the lawyers’ profiles. You’ll find information that includes the lawyers’ location, client ratings for previous projects, expertise, years of experience, and credentials.
  5. Connect with a lawyer you think is best suited to your requirements and hire them to review your startup agreements.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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