“A verbal contract isn’t worth the paper it’s written on.” Samuel Goldwyn
Contracts are a critical component in any business deal. It is the document which binds two or more parties to an agreement they have reached. In my first couple of startups we didn’t pay too much attention to the detail which goes into contract writing and suffered as a consequence. Ever since, I have always had a legal counsel advise the companies I work with on how the contract should be drafted. In essence the pattern I have seen is, that the most effective contracts are those which state clearly and concisely what has been agreed upon by both parties. If any level of ambiguity is left in this equation it could have serious ramifications in the future.
The question that arises is that since legal counsel is expensive, how is a startup supposed to pay for it on a limited budget? You should look into your network of friends and see whether anyone is studying or practicing company law and can help you out. If not then look at the internet to find reliable sources where you can buy some ready made templates for specific deals. This website helped me when I was drafting agreements and covered the things that need to be looked out for when writing contracts.
Whichever method you choose make sure that you research it well before signing any piece of paper. Signing is the easy part, it gets a lot more complicated when you want to exit the contract in a clean and quick fashion. In the near future I will have a couple of legal guests writers contribute some articles to help you out in writing clear, concise and unambiguous contracts.