Indian businesses often run on trust, relationships, and verbal understandings. That works—until there is a disagreement, a delayed payment, or a change in management.
Written agreements are not about “distrust”; they are about **clarity and memory**. This guide covers the **core agreements every Indian business should consider putting in place** early, and what each should typically cover.
1. Founders’ Agreement (or Shareholders’ Agreement)
If you have more than one founder or shareholder, a **founders’ agreement** or comprehensive **shareholders’ agreement** is critical.
1.1 Why It Matters
- Clarifies equity split and vesting
- Defines roles and responsibilities
- Sets rules for exits and dispute resolution
1.2 Key Points to Cover
1. **Shareholding and Vesting**
- Who owns how much, and whether any portion vests over time.
2. **Roles and Decision-Making**
- Who runs operations, who focuses on sales, tech, finance, etc.
- Board structure and voting rights.
3. **Exit Scenarios**
- What happens if a founder wants to leave.
- Rights like drag‑along, tag‑along if investors come in later.
4. **Non-Compete and Confidentiality**
- Reasonable restrictions to protect the business.
A properly drafted founders’ agreement can prevent years of conflict later.
2. Employment and Consultant Agreements
People build your company. Their contracts should be clear.
2.1 Employment Agreements
For key employees, include:
- Role and designation
- Compensation and benefits
- Working hours and location (including WFH where applicable)
- Probation, notice period, and termination terms
- Confidentiality and IP assignment
2.2 Consultant / Freelancer Agreements
When working with consultants:
- Clearly define deliverables and payment milestones
- Clarify whether they can work for competitors
- Confirm who owns the IP created during the engagement
Avoid “handshake” deals, especially for **CXO‑level hires** and critical tech or design contractors.
3. Service Agreements with Clients
If you provide services—IT, AI, consulting, marketing, logistics—have **standard service agreements**.
3.1 What They Should Cover
1. **Scope of Services**
- Detailed description of what you will and will not do.
2. **Fees and Payment Terms**
- Amount, milestones, invoicing, and late payment consequences.
3. **Service Levels and Timelines**
- Response times, delivery schedules, uptime targets (for tech).
4. **Confidentiality and Data Protection**
- Especially important for IT and AI service providers.
5. **Liability and Indemnity**
- Limits on your liability
- Situations where you will indemnify the client (and vice versa).
A clear service agreement reduces disputes and accelerates collections.
4. Vendor and Supplier Agreements
On the supply side, put structure in place with vendors.
4.1 Purchase Orders and Master Supply Agreements
- Define product or service specifications
- Quality expectations and inspection rights
- Delivery timelines and penalties for delay
- Pricing and price‑revision mechanisms
4.2 Payment Terms and Security
- Advance, credit period, and retention (if any)
- Conditions for returning or rejecting goods
These agreements protect your supply chain and help manage risk if a key vendor under‑delivers.
5. Non-Disclosure Agreements (NDAs)
NDAs are simple but powerful tools when used correctly.
5.1 When to Use NDAs
- Before sharing sensitive business or technical information with potential partners or investors
- When vendors or consultants will access your internal data
5.2 What a Basic NDA Should Include
- Definition of “confidential information”
- Purpose of disclosure
- Obligations of receiving party
- Duration of confidentiality
- Exclusions (e.g., information already public)
NDAs strengthen your position if information is misused.
6. Website Terms, Privacy Policy, and Online Terms of Use
If you operate a website or app (especially B2C):
1. **Terms of Use**
- Rules for using the platform
- Limitations of liability
2. **Privacy Policy**
- What data you collect, why, and how you use/store it
- User rights and consent mechanisms
3. **Refund and Cancellation Policy** (if applicable)
- Clear conditions for refunds and cancellations
These documents help with compliance, consumer protection laws, and user trust.
7. Loan, Investment, and Security Documents
If your business takes loans or investments, documentation is critical.
7.1 Loan Agreements
- Amount, interest rate, and repayment schedule
- Security or collateral provided
- Events of default and remedies
7.2 Investment Agreements
- Share subscription agreement
- Shareholders’ agreement
- Rights and preferences of investors
A good legal review here can prevent unfair terms and future disputes.
8. How to Build an Agreement Stack Without Overcomplicating Life
You don’t need dozens of documents on day one. Start with a **core stack**:
1. Founders’ or shareholders’ agreement (if applicable)
2. Standard employment and consultant agreements
3. Standard service agreement for clients
4. NDA template
Then add:
- Vendor agreements as your supply chain becomes complex
- Website/app policies as you scale online
- Specific loan and investment documentation when needed
Work with a legal partner (like FastLegal) to **customise templates to your business**. Avoid blindly downloading templates from the internet; they may not be aligned with Indian law or your specific risk profile.
Putting the right agreements in place is not about making everything complicated. It’s about ensuring that when there is a disagreement or change, you have a **clear, written reference** that protects your business and relationships.
