Adira for Startups and Founders: Contracts Without a Legal Team

A founder's first hundred contracts rarely touch a lawyer. A co-founder agreement gets drafted from a Google search. A SAFE gets copied from a US accelerator's GitHub repo. An offer letter gets built from a template a friend at another startup shared. A vendor MSA gets signed because the vendor's legal team wrote it and nobody on the startup side reads past the payment terms. None of this is reckless, it is just what happens when there is no legal team and there is a business to run. The problem shows up later: at diligence, at a dispute, or the day a departing contractor claims they still own the code. (Adira, which publishes this guide, sells contract drafting and review software, including a free tool called Weave; this page is written to be useful whether or not you ever use either.)

This guide covers the paper an Indian startup actually signs, the specific places a free US template gets Indian law wrong, what a founder genuinely needs before hiring a lawyer full time, and how to get there affordably, honestly, including when the free option is simply the right answer.

The paper a startup actually signs, in order

Roughly in the order it shows up:

• Founders' and co-founder agreements, covering equity split, vesting, and what happens if someone leaves early.
• Fundraising instruments: SAFEs, iSAFEs, convertible notes, and eventually a term sheet and a Shareholders' Agreement (SHA) for a priced round.
• Employment paper: offer letters, employment agreements, and ESOP grant letters once you have a pool.
• Vendor and freelancer contracts: the developer you hired before incorporating, the design agency, the contractor who built the first version of the product.
• Customer and SaaS paper: your own terms of service, master service agreements, and data processing terms once you sell to businesses.

Each of these is a different contract type with its own risk. What they share is a single failure mode: most of the free templates a founder finds online were written for US law, and India's default rules, the ones that apply automatically when a contract is silent or copied wrong, are often the opposite of the US default.

Where a free US template gets India wrong

Three traps catch founders more than any others, because each one looks harmless on the page and only bites later.

Trap one: the non-compete you assume protects you actually protects nobody. A US employment or founder template routinely includes a clause stopping a departing employee or co-founder from joining or starting a competing business for a year or two after they leave. In India, that clause is close to worthless. Section 27 of the Indian Contract Act, 1872 says:

"Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void."

Source: Section 27, Indian Contract Act, 1872 (Indian Kanoon). Unlike the US, Indian courts do not ask whether the restraint is "reasonable" in time or geography, they simply void it once it operates after the relationship ends. The Delhi High Court applied this as recently as June 2025 in Varun Tyagi v Daffodil Software Private Limited (FAO 167/2025), quashing an injunction against an engineer who joined a new employer after his notice period, holding that a post-employment restraint is void under Section 27 regardless of how it is worded. The Supreme Court reached the same conclusion decades earlier in Percept D'Mark (India) Pvt. Ltd. v. Zaheer Khan (2006) and Superintendence Company of India (P) Ltd v Krishan Murgai (AIR 1980 SC 1717): restraints operating during employment can be enforced, restraints reaching past the last working day generally cannot. A founder leaning on a post-exit non-compete to protect the business is leaning on a clause an Indian court will very likely strike down. Confidentiality and a narrow, named-client non-solicitation clause do the real protective work instead. Full walkthrough: our non-compete clause guide.

Trap two: "we own everything the contractor built" is not what silence gives you. This is the one that surfaces hardest at diligence. Section 19 of the Copyright Act, 1957 sets two default rules that apply the moment an assignment clause is silent. Section 19(5):

"If the period of assignment is not stated, it shall be deemed to be five years from the date of assignment."

Section 19(6):

"If the territorial extent of assignment of the rights is not specified, it shall be presumed to extend within India."

Source: Section 19, Copyright Act, 1957 (Indian Kanoon). A US-style "work for hire" clause that never states a period or a territory, exactly what most free contractor templates look like, does not hand an Indian company permanent, worldwide ownership of the code. It hands them five years, inside India only. The Delhi High Court confirmed this is not theoretical in Pine Labs Private Limited v Gemalto Terminals India Private Limited (Delhi High Court, Division Bench, 2011), holding that Sections 19(5) and 19(6) were "inevitably triggered" by a Master Service Agreement that used "assigns" but never stated a period or territory, full judgment. This matters more for a startup than most businesses, since so much early product code is written by a contractor or intern before the company even had payroll, and Section 17's employer-ownership default only covers actual employees, not contractors. Full fix, including moral rights: our IP assignment clause guide.

Trap three: an unstamped "signed" contract is not necessarily an executed one. A founder used to US practice treats "both sides clicked sign" as the finish line. Indian law adds a step: Section 35 of the Indian Stamp Act, 1899 bars an unstamped instrument from being "admitted in evidence for any purpose... or acted upon, registered or authenticated," until the deficient duty and a penalty are paid (Section 35, Indian Stamp Act, 1899). This applies to vendor MSAs and employment agreements just as much as a property sale deed. Full three-part test, signature, stamping, registration: our contract execution guide.

There is a fourth, fundraising-specific trap worth naming here even though it deserves its own page: a bare US-style SAFE, copied without modification, risks being treated as an unauthorised deposit under the Companies Act, 2013 and is not a recognised instrument for a foreign investor under India's FEMA rules. Most Indian rounds use an iSAFE, structured as Compulsorily Convertible Preference Shares, or a proper convertible note instead. If you are about to raise on a SAFE, read how to review a SAFE or iSAFE in India before you sign anything, including the dilution maths.

What a founder actually needs, and when

Five capabilities matter, roughly in the order a growing startup needs them:

1. Understand what you are being asked to sign, before you can negotiate anything.
2. Draft your own paper, so you are not negotiating from someone else's template every time: an offer letter, a vendor MSA, a basic terms of service.
3. Review what is sent to you, fast enough to not stall a deal, careful enough to catch the traps above.
4. Execute it properly, e-signature plus stamping, not just a signature.
5. Keep a repository, so that eighteen months later, when an investor asks for every vendor contract with an auto-renewal clause, you are not searching six inboxes and three former employees' laptops.

Red flags across a startup's contract stack

Normal	Red flag	Why it matters
Non-compete restricted to the employment period, confidentiality and a named-client non-solicit survive exit	A post-termination non-compete copied from a US offer letter template	Void under Section 27; the founder is relying on protection that does not exist
Contractor or freelancer IP assignment states "in perpetuity, throughout the world"	Assignment clause silent on period and territory	Defaults to 5 years, India only, under Sections 19(5) and 19(6)
Vendor payment terms at or under 45 days for any Udyam-registered micro or small supplier	A blanket net-60 or net-90 term with no registration check	Unenforceable against a registered MSE supplier under Section 15 of the MSMED Act, 2006; see our MSME 45-day payment guide
SAFE or note structured as an iSAFE or a DPIIT-linked convertible note	A bare, unmodified US SAFE used for an Indian round	Risks being read as an unauthorised deposit, and is not FEMA-recognised for a foreign investor
A named party and deadline for e-stamping before signature	"Stamp duty, if applicable, shall be borne by the Parties," no process named	Nobody actually does it; the instrument stays inadmissible under Section 35
ESOP grant letter states a 12-month exercise window and a narrowly defined "Cause"	A 30-day post-termination exercise window with broad, undefined "Cause"	Fully vested options can lapse worthless within a month of resignation
Every signed contract stored in one searchable place with renewal and obligation dates tagged	Contracts scattered across email, WhatsApp, and former employees' drives	You cannot answer a due diligence request, or catch an auto-renewal, in time

A bad-to-better rewrite: the contractor IP clause most startups sign wrong

This is the clause a startup is most likely to have already signed, with its first developer, designer, or agency, before anyone thought to check it.

Bad: "The Contractor hereby assigns to the Company all intellectual property rights in the deliverables created under this Agreement."

What is wrong: no stated period, no stated territory, no mention of drafts, source code, or derivative works created along the way, nothing on moral rights. Under Sections 19(5) and 19(6), this reads as a five-year, India-only assignment, not the permanent, worldwide ownership most founders assume they got.

Better: "The Contractor hereby irrevocably assigns to the Company, in perpetuity and throughout the world, all right, title and interest, including copyright and all economic rights, in and to the Work Product, including all drafts, source code, documentation and derivative works created during the course of this engagement. The Contractor waives, to the extent permitted by law, any moral rights under Section 57 of the Copyright Act, 1957 that would restrict the Company's use, modification or adaptation of the Work Product."

What changed and why: naming "in perpetuity" and "throughout the world" explicitly defeats the two statutory defaults instead of relying on silence, widening scope to drafts and derivative works closes the gap free templates usually leave, and addressing moral rights under Section 57 closes the one thing an outright ownership transfer cannot close by itself. You can run this exact check, for free, on a contract you already have, by dropping it into Weave, Adira's browser-based, no-login contract tool, and checking whether the assignment clause states a period and a territory.

How Adira and Weave actually fit a startup, honestly

If you are two or three co-founders with no hires yet, start with Weave. It is free, needs no login, and lets you upload a contract, a SAFE, an offer letter, a vendor MSA, and get it read against exactly the kind of India-specific gaps covered above: missing periods, missing territories, post-termination restraints, unaddressed stamping. For a very early startup, this is genuinely the right tool, not a downsell, and we say so plainly because a two-person company paying for a seat-based workspace before it has paper volume to manage is usually the wrong call.

The moment that changes is roughly when you have a small team generating repeat paper, offer letters, vendor contracts, customer MSAs, and need drafting in your own house style plus a repository that survives someone leaving. That is where Adira, the paid workspace, fits: it drafts from your company's own contract positions, reads and flags an incoming contract the way this guide flags one manually, and keeps signing, stamping status, and renewal dates against the same file instead of six different tools. Adira's published pricing, last verified September 2026: Practice at $89 per seat per month billed annually, or $109 month to month, with a minimum of 3 seats; Firm and Enterprise sit above that and generally suit a larger legal or ops team than most startups have this early. A 3-seat Practice team on annual billing runs to roughly $267 a month, before any GST that may apply to an Indian buyer under the usual import-of-service reverse charge rules. Our pricing breakdown covers what each tier includes and the worked GST example in full; confirm the current number on adiralaw.com before budgeting, since any live SaaS price can change.

US and global contrast

A founder used to US counsel or US templates is used to a different default map: non-competes are generally enforceable if reasonable in scope, "work made for hire" vests IP in the employer immediately for qualifying work with no separate assignment needed, and, outside a handful of states, there is no general stamp duty on a signed commercial contract at all. None of those three defaults hold in India, which is exactly why a template built on them, pasted in without adjustment, fails in the ways described above.

FAQ

Do I need a lawyer before I sign my first vendor contract? Not necessarily on day one. Checking it against the traps above, non-compete scope, IP assignment period and territory, MSMED payment terms, gets most early-stage risk to a manageable level. Bring in a lawyer for anything with real money, equity, or a dispute already brewing.

Is Weave enough, or do I need Adira from the start? For a pre-hire, two or three co-founder startup, Weave is usually enough: free, reads one contract at a time, catches the same gaps this guide covers. Adira earns its cost once you have repeat paper and a small team needing drafting in a consistent house style plus a shared repository.

Can I use a US SAFE template for an Indian pre-seed round? Not unmodified. A bare SAFE risks being treated as an unauthorised deposit under the Companies Act and is not a FEMA-recognised instrument for a foreign investor. Most Indian rounds use an iSAFE or a proper convertible note instead. See our SAFE review guide before your next round.

My co-founder agreement has a non-compete if someone leaves. Is that enforceable? Almost certainly not, if it tries to restrain someone after they leave the company. Section 27 voids that regardless of how reasonable the time period looks. Confidentiality and a narrowly scoped non-solicitation clause protect the business in ways a non-compete legally cannot in India.

We hired our first developer as a freelancer, not an employee. Do we own the code? Only if the contract has an explicit, properly scoped assignment clause, stating a period and a territory. Section 17's automatic employer-ownership rule covers employees under a contract of service, not contractors, so silence in a freelancer contract defaults to a five-year, India-only assignment under Section 19, not permanent ownership.

What does a startup on Adira's Practice plan actually get for 3 seats? Drafting from your own contract positions, document review and risk flagging, e-signing and e-stamping in one workflow, and a searchable repository, at the published Practice rate. The exact feature list and a worked cost example are in the pricing breakdown; confirm current numbers on adiralaw.com.

This guide explains the general contract traps and options an Indian startup faces, and where free and paid tools each fit. It does not tell you whether a specific clause in your specific contract, your co-founder agreement, your SAFE, your first developer's IP assignment, will hold up if it is actually contested. That depends on the exact wording and the facts of your situation, and is not legal advice. Talk to a startup lawyer before you sign anything with real money, equity, or a departing co-founder attached to it.