StartupFino specialises in providing legal services for startups to make your enterprise function in an efficient and smooth manner. The package of legal services for startups at StartupFino include HR policies, customer service agreements, vendor agreements, maternity policy, leave policy for employees, legal agreements ranging from founders’ agreement to employment agreements.
HR Policies for Startups
HR policies are a set of important standards used to govern an organisation's staff. In India, the importance of human resource policy is truly focused on striking the correct balance between protecting its people and the company's mission. It also aids in the avoidance of compliance concerns and legal problems.
Having the correct HR policies for startups, on the other hand, not only helps to keep things in order, but also plays a significant part in taking timely disciplinary steps for future issues. The policies are documented so that there is no bias or partiality.
HR Policies for Start-Ups in India
Some important points to be taken into consideration by startups while drafting their HR Policy and are included as part of our legal services for Startups include:
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Area
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Points
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Working Hours
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- Clearly state working days and timing
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- Comply with labour laws of India
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Leave Policy
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- Specify number of leaves allowed
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- Outline terms and conditions for availing leaves
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- Include provisions for general holidays, sick leave, etc.
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- Follow labour law compliance and standards
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Performance Management & Appraisal
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- Encourage employees to improve performance and communication
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- Serve as a reference for appraisal
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- Motivate and incentivise employees
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- Describe employee benefits and perks
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Organisational Culture/Code of Conduct
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- Explicitly explain ethical behaviour and expected conduct
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- Instil qualities of empathy and respect among team members
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- Enforce policy to promote a positive work environment
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Joining and Exit Policy
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- Clearly define terms and conditions for employment commencement and termination
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Salary, Benefits and Perks
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- Ensure employees understand compensation, bonus, and perks
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- Specify payment structure and promotions
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- Include factors such as insurance in HR policy
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ESOP Policy for Startups
Employee stock ownership plans (ESOPs) are an important part of online legal services for Startups that enable employees to buy business shares at a lower price - mainly begun by start-ups for selected workers based on their status and impact inside the business.
An advantage is the fact that workers can profit from the company's success and obtain regular compensation even in tough times. ESOPs allow workers in Indian start ups to get involved in the business expansion.
Benefits of ESOPs for Startups
Some main benefits of ESOPs as part of legal support for startups are:
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Merit
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Description
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Financial Gain
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ESOPs allow employees to benefit financially from their stock, profiting from the company's success and potential increase in stock value.
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Motivation & Retention
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Employee stock options incentivise and reward employees for contributing to the company's success, thus increasing motivation and fostering retention.
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More Loyalty
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By having a stake in the company's future through ESOPs, employees develop a stronger sense of loyalty and connection to the organisation.
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Cost Effective Compensation
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ESOPs enable businesses to compensate employees without incurring unnecessary costs when employees leave or retire.
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Shareholder Participation
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ESOPs empower employees to become shareholders, allowing them to participate in decision-making and ownership of the business.
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Consistent Salary
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Employees with ESOPs still receive a regular salary, even in the event of poor corporate performance, providing stability in income.
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Employee Growth & Involvement
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ESOPs in Indian Startups help employee involvement in the business's success, aligning their interests with the organisation's goals.
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Offers tax benefits
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Including ESOPs in the benefits package can provide tax benefits for the business, as these programs may not be valued on the company's records until exercised.
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Deductible tax
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After employees exercise their options, the organisation can deduct the difference between the market price and the strike price from compensation costs.
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Leave Policy for Startups
Startups must provide their employees with several types of leaves, such as sick leave, fatherhood or maternity leave, compensatory work off days and casual leaves, in addition to the earned leaves granted under Indian labour legislation.
After money, the amount of yearly leave days and the policy that goes with them are the next greatest aspects that employees strive for in a job. Earned holidays or yearly leaves are paid days off that an employee is entitled to in addition to holidays. As a result, firms must exercise extreme caution while planning their employees' annual leave.
Types of Leaves for Employees of Startups
Several types of leaves that can be availed by employees of a startup in India are:
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Leave Type
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Description
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Sick Leaves
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- Used for both short and long-term health needs.
- Availability depends on company and state laws.
- Can be used for personal or family member's illnesses.
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Casual Leaves
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- Granted for unexpected emergencies or incidents.
- Generally available after the probationary period.
- Requires prior authorisation.
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Statutory Leaves
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- Mandated by state or national norms for the benefit of the working community.
- Governed by labour laws and should be included in company policies.
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Maternity Leave
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- Provided to female employees before and after childbirth.
- Duration varies based on factors like adoption and third child policy.
- In India, the paid maternity leave period has been extended by the 2017 amendment.
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Bereavement Leave
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- Granted upon the death of a close family member.
- Generally ranges from 1 to 7 days of paid leave.
- Offering bereavement leave demonstrates empathy and values employee well-being.
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Sabbaticals
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- Long-term leaves taken for travel, further studies, or personal breaks.
- Usually unpaid and extended over an extended period.
- Retaining the job is assured, but specific policies may vary.
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Roll-over Leaves
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- Allows unused leaves to carry forward to the following year.
- Prevents leave lapses and provides flexibility for employees.
- Acknowledges employees who have accumulated unused leaves.
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Maternity Policy for Startups
Maternity leave in India is a paid leave of absence from work which is meant for the female employees to be able to care for their new-born children while keeping their jobs and not being laid off due to pregnancy and after care of children. This policy is also drafted as part of start up legal services.
The Maternity Benefit Act was passed in 1961 and gave mandatory provision that women employees get their share of 12 weeks of leave (which is paid as per industry standards) after childbirth. This Act applied to businesses with ten or more employees. The Act applies to all women who work on a contract, on a permanent basis or for government organisations
Maternity Leave Amendments under Maternity Benefit (Amendment) Act 2017
Changes under new maternity leave law in India that can be availed as part of legal services for startups include:
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Amendment
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Description
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Extended maternity leave
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The maternity leave duration for female staff members has been increased from 12 weeks to 26 weeks.
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Mandatory compliance
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Organisations with a minimum of ten workers are now required to follow the provisions of the maternity leave law.
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Increase in pregnancy leave
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The duration of pregnancy leave has been extended to 8 weeks.
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Maternity leave for mothers with multiple children
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Mothers with two children are entitled to twelve weeks of maternity leave upon the birth of their third child.
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Maternity leave for adoptive mothers
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Women adopting a child under three months are eligible for a 12-week maternity leave.
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Maternity leave for commissioning mothers
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Commissioning mothers, who are biological mothers but not those giving birth, are entitled to a 12-week leave starting from the day of child handover.
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Legal Agreements for Startups
First time entrepreneurs face a challenging task in understanding legal jargon (terms & language) and preparing documents. But understanding the fundamental legal requirements and also getting the proper direction and ability to access trustworthy legal files can make understanding the legal aspects of beginning a startup easier and cheaper. This can be done through StartupFino’s legal advice for start ups and legal services for startup companies.
Important Legal Documents for Startups
Some important legal documents for a new startup as part of the legal services for startups are:
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Legal Document
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Description
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Offer Letter
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A written document transmitted by a startup to a selected individual, containing conditions and terms of employment, starting date, job description, income, and other details.
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Appointment Letter
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Issued to a candidate who accepts the offer letter and joins employment, providing information regarding the job, benefits, salary, work procedures, confidentiality, and other crucial employment details. Appointment letters are more comprehensive than offer letters.
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Website Privacy Policy
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A legal document or statement discussing how a website collects, uses, maintains, and discloses consumer data. Required under Indian Information Technology Rules, 2011, and often mandated by payment gateway providers for internet companies. Privacy policies safeguard personal information and promote transparency in data handling.
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Employment Agreements
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Offer letters and appointment letters for new employees, specifying terms and conditions, including termination circumstances.
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Vendor/Contractors Agreement
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Written agreements with vendors or contractors covering terms of service or goods supply, payment terms, deductions on service defaults, accepted service levels.
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Service Level Agreements
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Agreements with customers and vendors defining the expected level of service, providing legal support in case of disputes.
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Rent or Lease Agreements
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Agreements for office space, clarifying tenancy terms and preventing unexpected eviction, whether using a founder's place or rented space.
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Founders Agreement
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For startups not organised as private limited companies, outlines terms and conditions between founders, including shareholding and future share allotment.
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Share Transfer Deed
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Executed during share transfers to founder members, directors, employees, or investors, containing terms and conditions, share price, and conditions for nullification.
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Other Documents
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Additional documents for the specific needs of the firm, such as term sheets for investors, anti-dilution agreements, non-disclosure agreements, etc. These can be recommended by our expert team at StartupFino based on the start-up’s requirements.
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Founders’ Agreement for Startups
A Founders Agreement defines the contractual duties of the owners/founders of a business. The document discusses the firm's functioning, management, ownership along with founders duty on the business. The document seeks to safeguard the company's interests and avert future conflicts. This can be availed as part of StartupFino’s legal services for startups from our experiences start up lawyers.
Important Clauses of a Founders Agreement.
Key provisions to include in a founders' agreement are:
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Aspect
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Description
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Ownership or Equity Ownership
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Startups should consider distributing equity amongst founders, investing, intellectual property rights, and networking in a founders' agreement.
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Exit of Co-Founders
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The agreement should contain an exit clause defining voluntary or forced exits along with the proper procedure or process.
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Roles & Responsibilities
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Determine the duties & duties of each individual co-founder to ensure reasonable work sharing.
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Transfer of Shares Restriction
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Include restrictions on share transfer (lock-in periods, valuation methods) clauses.
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Assignment & Licensing of Intellectual Property
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Ensure the founders give the company intellectual property rights to own produced assets.
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Additions of Value from Co-founders
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Include provisions for extra value contributed by co-founders, including technical know-how or proprietary information.
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Non-Compete Clause
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Incorporate a non-compete provision under the Indian Contract Act limiting competition during employment and for a period following termination.
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Confidentiality
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Protect important company data using a Non-Disclosure Agreement.
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Data Protection
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Add data protection measures in line with GDPR and the private information protection bill.
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Terms of Employment
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Define the conditions of employment for specific founders and draft distinct employment contracts covering remuneration, shareholding, duties, and rights.
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Decision Making Ability
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Define decision-making abilities and areas or departments of responsibility for each founder.
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Prospective Finance and Investment
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Detail the way the agreement will fund the future finances - equity or debt.
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Dispute Resolution
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Include language permitting co-founders to settle disputes by arbitration, reconciliation, mediation, or out-of-court resolutions.
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Termination
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Include a termination clause that describes post-termination provisions and obligations.
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Customer Service Agreements for Startups
A service agreement is a contract that specifies the terms and obligations of any firm or organisation that provides a service and the client who uses it. The provisions of this agreement establish the nature and form of the service, the obligations of the parties, the recompense or payment and the services to be supplied. This can be availed from StartupFino’s legal services for startups as part of our legal service package.
Basic Clauses to Include in Service Agreement for Startups
The provisions and clauses which the service agreement includes is to regulate the relationship between the parties. As a part of legal services for startups, these clauses include:
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Clause
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Purpose
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Term of the Agreement
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The period or period of time which the service contract is enforceable.
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Payment Conditions
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The terms and conditions of payment (payment methods, frequency, and relevant discounts or penalties).
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Service Definition
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Clearly establishing the kind and scope of services to be offered under the agreement.
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Service Scope
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Certain tasks, responsibilities, and deliverables within the service scope.
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Inclusions & Exceptions
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Stating what is covered and not covered under the service agreement.
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Ownership Entitlements
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Concerning ownership rights to other assets or intellectual property connected with the services.
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Non-Disclosure
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Protection of confidential information and obligations associated with its use or disclosure.
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Party Rights & Duties
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Identifying the rights, responsibilities, and obligations of each party involved.
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Outsourcing
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Regarding the potential for subcontracting or assigning some services to outside parties.
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Assurances & Guarantees
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Making representations, warranties, or guarantees about the quality or overall performance of the services.
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Compensation
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Defining the method and quantity of compensation for services provided.
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Liability Limitations
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Defining the scope of liability and limitations of liability for damages and losses between the parties.
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Termination Procedures
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Outlining the process and conditions for terminating the service agreement.
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Appropriate Jurisdiction & Dispute Resolution Methods
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Defining the governing law and means for resolving disputes.
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Vendor Agreement for Startups
A Vendor Agreement is a legal and written contract as a part of legal services for startups that specifies the criteria and terms of the vendor's work. A vendor is someone or anything that provides a specified amount of product or service to a consumer. A basic vendor agreement must include information like the time, date and location where the vendor must perform the required services.
Necessary Clauses of Vendor Agreements for Startups
The key elements which constitute Vendor agreements for startups include:
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Key Clause
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Description
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Pricing
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Describes the fixed or variable consideration to be paid to the vendor for services or goods.
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Delivery Terms
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Clearly specifies when and how the item or service will be sent to the consumer (includes instalment delivery).
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Payment Terms
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Defines the payment methods, penalties, or interest if payment delays occur.
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Indemnity Clause
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Determines whether the vendor is responsible to the customer for losses suffered due to damaged or defective goods.
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Exit/Termination Clause
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Provides a legal means for both sides to end the agreement unilaterally and through mutual consent.
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Representations & Warranties
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Includes the agreed-upon terms and conditions of the agreement as a warranty and representation.
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Confidentiality Problems
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Obliges both parties to maintain confidential information shared in the agreement and not disclose it to others.
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