What contracts does my startup need in New Zealand? – Company / Commercial law

Starting a business is no easy task. You need to price your product, explore the market, find suppliers, reach your customers, and sort out legal issues. Ultimately, legal work is an investment in the successful growth of your business. Below, we outline the essential legal contracts your startup needs. These include contracts for:

• customers,
• your workers,
• the structure of your business; and
• other people your business interacts with, such as investors and lenders.

Of course, the content of your contracts may be different from other startups. It will depend on how you conduct your business. However, this article will provide you with a complete starting point for the contracts you need to put in place.

Contracts for your clients

If you are running a business, you will automatically have a legal relationship with your customers. This is the case even if you don’t have anything in writing. Therefore, you should be prepared to draft legal documents to describe the goods or services you provide and the terms and conditions under which you provide them. Such documents will also ensure that your business appears trustworthy and professional.

What contracts do I need for my clients?

The two main contracts you need for your clients are:

Type of Contract	What type of companies use this contract	Examples of business types
Customer or service agreements	Service companies mainly use agreements with customers.	trader; building contractors; architects; consultants; and real estate agents.
Terms of Sales	Property-oriented businesses primarily use general terms and conditions contracts.	e-commerce stores; retail stores; and manufacturers.

Many businesses will only need a customer agreement or shop policies (but not both) depending on the nature of the business.

What should I include in legal documents?

Customer agreements and general conditions of sale must describe:

• details of the goods or services you provide; and
• how you will provide those goods or services.

If you are entering into a customer agreement, it should also cover:

• details of the scope of work;
• when you plan to provide the service from here;
• how you will price and bill for your services;
• guarantees on the quality of service; and
• how your business will resolve disputes.

Your general conditions of sale must cover:

• details of the product you are selling;
• how your business will deliver the products and when;
• how and when you will be paid;
• guarantees on the quality of service; and
• the refund and return process.

Contracts for your workers

If your business has employees or entrepreneurs, you should make contracts with these people. These contracts are essential for clearly defining what kind of assistance you will need and the terms and conditions of their service.

What contracts do I need for my employees?

New Zealand companies may have workers on board as employees or contractors. As an employer, you can employ workers on a fixed, permanent or occasional basis. There are certain laws in New Zealand that govern the relationship between employers and employees. These include national standards that ensure that every employee has access to basic rights. Labor law is a complex area because you have certain obligations as an employer to protect your employees.

Your employment contract must cover the following:

• remuneration;
• vacation rights;
• working hours;
• severance ;
• job specification; and
• termination and probation provisions.

What contracts do I need for my contractors?

Entrepreneurs are different from employees because employment laws do not cover them. Usually these will be people who are self-employed or employed by another company. They provide their services to your business. The terms of a contractor’s contract are similar to those of a client’s contract.

Your internal legal documents

Internal legal documents include the documents that define how you operate and manage your business internally. The contracts your startup needs will depend on your business structure.

Structure	Internal legal documents
Individual Trader	If you are an independent trader, it is unlikely that you will need any of these documents.
Partnership Agreement	Partnership Agreement
Company	Constitution; and shareholders’ agreement (if you have more than one shareholder).

These contracts are crucial in protecting your startup against any litigation that may arise between your business partners. It also helps to ensure that there is a defined process for the way you make decisions and the operations of the business as a whole.

Legal documents for external parties

If your business interacts with someone, you will likely create a legal relationship with that person (even if you don’t have a written contract). Therefore, you should always seek to protect yourself by entering into a written contract to clarify what your rights and obligations are in this relationship.

Here are some examples of people your business might interact with:

• investors;
• financial;
• manufacturers;
• distributors;
• Suppliers;
• franchisors; and
• the donors.

If your business interacts with any of these people, it is recommended that you consider entering into a written legal contract to document the relationship. It will help you to avoid a costly dispute on the track.

Key points to remember

Before deciding to transact or interact with someone through your business, you should consider:

• whether you have a written legal contract in place for this relationship (or if they ask you to sign one);
• if you do not yet have a written legal contract in place, put one in place; and
• When setting up a written legal contract, what are the key terms you want the contract to cover (e.g. price, deliverable, timing and dispute resolution process).

If you have any questions about the contracts your startup needs, contact LegalVision’s contractual lawyers at 0800 447 119 or fill out the form on this page.

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