When your startup starts selling, partnering, or outsourcing - it’s time to start signing commercial agreements. Whether you’re licensing software, onboarding a reseller, or buying cloud services, these contracts govern how your business operates in the real world.
Here’s a founder-focused breakdown of the most common types - and what to watch out for.
What Is a Commercial Agreement?
It’s any agreement between your startup and another business that relates to buying, selling, licensing, or delivering goods or services. Common examples include:
- Sales Agreements: Outline what you’re selling, to whom, and under what terms.
- Licensing Agreements: Cover the use of your software or IP by a customer or partner.
- Reseller or Distribution Agreements: Govern how third parties can sell your product.
- Vendor Agreements: Detail the terms when you’re the customer—especially for SaaS, marketing, or development services.
- Partnership Agreements: Formalize collaborations, co-marketing deals, or referral arrangements.
Key Clauses to Understand
- Scope of Work: What exactly is being provided? Vague terms = future disputes.
- Payment Terms: When are invoices due? What happens if a client is late?
- IP Ownership and License Rights: Who owns the technology, content, or deliverables? Are you granting a license, and if so, is it exclusive, perpetual, or revocable?
- Confidentiality: Every deal should have an NDA-like clause—especially if trade secrets or customer data is involved.
- Indemnification: Who’s responsible if something goes wrong—like an IP infringement claim?
- Limitation of Liability: Limit your risk. Most commercial agreements cap liability at the amount paid under the contract.
- Termination: Can either party exit the contract? With how much notice? What happens to unpaid fees?
Common Pitfalls
- Using the vendor’s paper: If the other side gives you their standard agreement, assume it favors them. Always review or negotiate—especially IP, liability, and payment terms.
- Skipping the legal review: Even “simple” commercial deals can carry big risks. Have counsel look over key agreements before signing.
- No audit rights: If you’re offering software or content under a license, consider including audit rights to ensure compliance.
Final Thoughts
Commercial agreements are how startups turn vision into revenue. But the fine print matters. Whether you're closing your first sale or signing a big channel partner, we’ll help you get the deal done - with your startup’s long-term interests in mind.
Frequently Asked Questions
FAQs
What’s the difference between a sales agreement and a licensing agreement?
A sales agreement transfers ownership of goods or services, while a licensing agreement grants permission to use intellectual property without transferring ownership.
Do startups need different agreements for vendors and customers?
Yes. Vendor agreements protect you when purchasing services, while customer agreements protect you when selling or licensing your own products.
Can I use a template for commercial agreements?
Templates are a good starting point, but every deal has unique risks. Having counsel customize terms ensures your startup is protected.
What should startups prioritize when reviewing commercial agreements?
Focus on intellectual property rights, payment terms, liability limits, and termination clauses, as these areas create the most potential risk.
Don't DIY your legal anymore
Leave it to the pros.