Legal Contracts

Without an agreement, a co-founder’s departure can lead to messy disputes over equity, valuation, and intellectual property. A Co-Founders’ Agreement proactively outlines clear exit clauses, such as: the terms on which co-founder can be terminated or resign, how vested and unvested shares are handled, buy-back options for vested shares, valuation methods, and the handling of IP, ensuring a smoother transition and protecting the remaining founders’ interests.

“Vesting” is the process by which a co-founder’s ownership of their equity (shares) in the startup becomes absolute over a period of time or upon achieving specific milestones. It ensures that co-founders earn their stake through continued contribution, protecting the company and other founders if someone departs prematurely. A common structure includes a “cliff” period before vesting begins.

You should enter into a Co-Founders’ Agreement as early as possible, ideally before formally commencing material business operations or making significant decisions. This ensures all founders are aligned on roles, responsibilities, equity split, and decision-making from the very beginning, preventing future disputes.

Yes, when properly executed on stamp paper, it’s a legally enforceable contract under Indian law, though not legally mandated for company formation. It’s a commercially prudent step for any multi-founder startup.

This vital legal document outlines the roles, responsibilities, ownership, rights, and liabilities of startup co-founders. It’s essential for defining equity allocation and vesting, protecting IP, establishing decision-making processes, planning exit strategies, and mitigating potential disputes among founders.

Both types of clauses are generally enforceable during employment. However, in India, (a) post-employment non-compete clauses are generally not enforceable due to Section 27 of the Indian Contract Act (which, very simply, voids restraints of profession or trade), unless very narrowly defined and reasonable; and (b) post-employment non-solicitation clauses (preventing soliciting former clients/employees) are generally more enforceable if they are reasonable, protect a legitimate business interest, and don’t amount to a complete restraint of profession or trade.

While direct employment relationships are not advisable, foreign companies can open branch offices, Indian subsidiaries, or engage employees through a secondment arrangement or an employer of record’.

Yes, these vary in their scope, timing, and/or purpose. An Offer Letter expresses the mere intent to hire and outlines initial basic terms. An Appointment Letter formalizes the offer and may act as a basic contract once acknowledged in writing or by conduct. A comprehensive Employment Agreement, however, provides much more detailed terms and conditions, covering rights, obligations, policies, intellectual property, and termination in greater depth. This is essential for start-ups looking to maintain strong governance and internal controls from an early stage.

It’s highly recommended to enter into detailed employment agreements  with permanent and part-time employees, which clarify terms, roles, and statutory benefits. For consultants and interns, distinct service agreements or internship agreements are crucial to define scope, compensation, intellectual property, and to avoid misclassification risks by clearly distinguishing them from permanent employees.

Important clauses cover job description, salary and benefits (including PF/gratuity), employment duration, leave policy, confidentiality, intellectual property ownership, termination notice periods, and dispute resolution. While not strictly mandated, a written agreement is highly recommended in India.

Yes, however, amending or changing an MSA typically requires mutual agreement from all parties involved, formalized and signed through a written amendment or addendum.

An MSA provides the overarching, general terms and conditions for the entire business relationship. A Statement of Work (SOW), conversely, is a specific document outlining the details of each individual project or service, including scope, deliverables, timelines, and pricing, all referencing the established MSA.

Businesses should consider using MSAs when you anticipate ongoing or long-term business relationships involving multiple projects, services, or transactions with the same client or vendor. It establishes a consistent legal framework for all future engagements and reduces multiplicity of documents/agreements (and the resulting conflicts).

Key components typically include the scope of services, payment terms, confidentiality, intellectual property rights, term and termination conditions, liability limitations, and dispute resolution mechanisms.

An MSA acts as the main framework for an ongoing business relationship. It sets out general terms for current and future services so that parties can execute statements of work (SOWs) without re-negotiating detailed agreements each time. This is especially useful in B2B, SaaS, and enterprise models where the MSA serves as the ‘umbrella agreement’ for all services or subscriptions procured by the customer.

If an NDA is breached, typical remedies include seeking monetary damages for losses incurred, including indirect and foreseeable damages in certain cases. Crucially, courts can also issue an injunction, which is a court order prohibiting the breaching party from continuing to misuse the confidential information.

The enforceability term of an NDA varies with the information’s nature. For trade secrets or highly sensitive data, it can be indefinite (perpetual). For other business information, a common duration is 3 to 5 years, though it should be reasonable and justifiable based on the information’s commercial value.

Yes, an NDA is legally enforceable under the Indian Contract Act, 1872.

Choose a non-mutual (unilateral) NDA when only one party is disclosing confidential information (e.g., hiring an employee, pitching to an investor). Opt for a mutual NDA when both parties will be sharing sensitive information with each other (e.g., joint ventures, strategic partnerships, M&A discussions).

An effective NDA defines confidential information (and its exclusions), specifies the purpose of disclosure, outlines the receiving party’s obligations, sets the term of confidentiality, details return/destruction of information, and states remedies for breach.

A Non-Disclosure Agreement (NDA) is a legal contract that obligates a party to protect sensitive, confidential information. It’s used during business negotiations, when engaging employees/freelancers, for investment discussions, or when sharing proprietary data with clients/vendors.

Yes, for most entities operating online in India, both are mandatory. A Privacy Policy is explicitly required for “data fiduciaries” (those processing digital personal data) under the Digital Personal Data Protection Act, 2023, and for “body corporates” handling sensitive personal data under earlier IT Rules. Similarly, Terms & Conditions (user agreement) are mandated for “intermediaries” (which include many websites, apps, and online platforms) under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. Even for businesses not affected by these requirements, having both is crucial for legal protection, defining user responsibilities, and managing legal liabilities in the long-term.

Yes, regular review and updates are crucial. Laws and regulations (like India’s Digital Personal Data Protection Act, 2023 and laws applicable in other jurisdictions where you have customers or users) evolve, your business practices or website features may change, and new technologies emerge. Keeping your T&Cs and Privacy Policy current ensures continuous legal compliance, mitigates risks, and maintains user trust.

In India, a privacy policy should primarily comply with laws like the Digital Personal Data Protection Act, 2023 (DPDP Act), detailing data types collected, purpose, consent, sharing practices, security measures, data retention, and user rights (e.g., access, correction, deletion).

A Privacy Policy informs users how their personal data is collected, used, stored, and protected.

Website Terms and Conditions are a legal agreement between the website owner and users, setting rules for website usage, defining rights and obligations, and covering aspects like intellectual property, disclaimers, and governing law.

Generally, yes—digitally signed contracts are valid under Indian law if they meet requirements of the IT Act. Scanned signatures may be accepted in some cases but could be challenged in court. For higher enforceability, using a secure electronic signature is recommended.

The non-breaching party can seek remedies such as specific performance (fulfilling the contract), monetary damages, or injunctions, depending on the nature and terms of the contract.

Yes, under the Information Technology Act, 2000, electronic signatures are legally recognized in India. As long as the signature is verifiable (e.g., using DSC or Aadhaar eSign), the contract is valid and enforceable.

It’s advisable to use stamp paper. While an unstamped contract isn’t invalid, it cannot be used as evidence in court unless properly stamped and penalized (through a process called adjudication). Stamping is crucial for enforceability.

Written contracts are always recommended, although oral contracts are valid in India. However, certain agreements (e.g., property sales) are legally required to be in writing.