Contract for start-up employees and how to secure myself as the leader of the company


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I'm a computer science student and have had an idea for a website for a while. Up until now, I haven't told anyone about it(even my family and girlfriend). Anyways, I decided to tell a friend of mine and his brother and we started working on it last week.

I was originally planning to have them sign an agreement reserving the idea as mine and all that good stuff that I'm sure happens all the time in start ups. I have three main questions:

  1. Is there a generic contract for these purposes somewhere on the internet.
  2. I also want to know if there are any other things I should worry
    about since I have already told them the idea before having them
    sign any contract. They seem like good guys but all three of us see
    a lot of potential in the idea so there's always that fear in the
    back of my mind that they could run off with it.
  3. Also, would I establish myself as the leader/CEO/president/head partner of
    this start up at this point? Or is it assumed that way, or does that
    happen later on down the road?

Thanks in advance,

Logan

Getting Started Co-Founder Legal Legal Documents

asked Apr 17 '12 at 14:15
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Logan Besecker
158 points
  • If you're looking for open-sourced legal documents, check out http://www.docracy.com/ It can be a bit heavy to sift through but you can mix and match parts from those contracts as you see fit. Unfortunately, it's rarely one-size-fits-all. – Hartley Brody 7 years ago

4 Answers


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Your making a fairly common mistake by putting significant value in an idea. Ideas are basically worthless, its the implementation that has value. A much higher risk to your budding business is your lack of trust towards your partner. Just trust them.

answered Apr 17 '12 at 17:15
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Tom Squires
1,047 points
  • thank you for your response. I do trust them and we have been working well together, I just wasn't sure if there were some precautions I should have taken. Thank you though – Logan Besecker 7 years ago

1

While I agree that it is important to trust, this does not negate the value of having some sort of written agreement. Having everything clearly laid out and everyone fully understanding the situation will in fact promote trust and minimize the possibility of misunderstandings down the road. I am not saying you need a 5,000 page document, what I am suggesting is something clear and simple that is easily understandable by a common person.

So if it is to be your company, say so. If they are to get a percentage, spell out exactly what they are to get and under what terms. For example do they get that percentage now or do they earn it over time?

Now you are not the first startup, and thousands, if not millions, of such agreements have been written before. The best person to help you draft a good agreement would be a lawyer who has experience with startups. Look around, do you have a friend or a cousin who is a lawyer? If not, still look around. Perhaps you can find one who will help you get started at little or no cost.

answered Apr 17 '12 at 20:49
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Jonny Boats
4,848 points

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Nondisclosure agreements are governed by state law. Generic forms certainly exist, but to know whether a given form is enforceable in your state or takes advantage of all the protections available you need to consult an attorney licensed in your state.

The status of your start-up is also determined according to state law. The choice of entity can affect tax treatment and individual liability, among others. It is possible that you have already entered into a partnership agreement with your friend and his brother, but it should be possible to change it or refine your partnership agreement.

answered Apr 18 '12 at 11:10
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Naw
46 points

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So since you are "working" on the idea, you might want to consider forming your company. When you form your company you will have all the IP assigned to the company and each member of the company will sign a confidentiality agreement with the company. It is hard to enforce confidentiality provisions outside of this context.

Now, you may not be here yet, and are seeing if you can work together - that is the most important part of this process. If you do not trust these people enough that you cannot trust them with an "idea" then perhaps they are not idea co-founders.

answered May 8 '12 at 06:15
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Matthew Faustman
11 points

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