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  • Anderson & Associates

Contract Essentials for Startups

Updated: May 24, 2023

By Shermian Koh on May 16, 2023.

Agreements govern all business relationships, whether with clients, employees, suppliers, manufacturers or employees. A company also requires different types of agreements depending on the stage of development it is in. For example, when there is growth in the business and an increase in demand for goods and/or services, companies are likely to bring on new vendors or subcontractors to cope with the demand. These new partnerships will require new subcontracting or teaming agreements.

If your business is offering a software as a service (“SaaS”), the service agreement must address key issues, including:

  •  Scope of services

  •  Excluded services

  •  Service Level Agreement (For example: what is the response time, what is the system availability?)

If your business is offering goods or equipment, the type of agreements required would depend on whether you are a manufacturer, supplier or distributor.

If you are a manufacturer or supplier of goods, the supply agreement with the customer

must address key issues, including:

  •  Warranties and product liabilities

  •  Defects, returns, exchange and/or refund policy

  •  Excluded liabilities

If you are a distributor of goods, the distributor agreement with the supplier must

address key issues, including:

  •  License to distribute (For example: what is the scope of the license and is this an exclusive or non-exclusive distributorship?)

  •  Terms of commission

  •  Scope of advertising and marketing requirements

  •  Delivery, inventory and product inspection requirement

The truth about using online agreement templates

In addition to the risk of not having all the above-mentioned key issues addressed in a

customized agreement, the other big risk in using boilerplate templates available online,

is the failure to include limitation of liability provisions to limit a party’s exposure in a

dispute, for example, by capping the amount of damages for which a party may be liable

to pay (liquidated damages, indemnities, etc). As the enforceability of limitation of

liability provisions is frequently litigated, companies are advised to consult lawyers to

ensure that the limitation of liability provisions are enforceable based on the applicable

jurisdiction’s law. Consulting a lawyer to review your contracts can help to address any

issues before they actualize into problems that will be costly for your business.


This article contains information on legal issues and is not a substitute for legal advice from a

qualified attorney licensed in the appropriate jurisdiction.

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