Three Contracts All UK Startups Need

In the rush to launch your first product, sorting out the “legal stuff” feels like a hurdle rather than a priority. However, the moment your startup moves out of "stealth mode" your risk profile shifts.

Here are three legal documents all startups in the UK need to get right before launching their first product or service.

1. Terms of Use

Terms of use are the rules of the road between your company and your users. Without them, you have no clear way to enforce how your software is used or to protect yourself if something goes wrong.

Why they are non-negotiable:

• Limit your liability: terms of use define what level of liability (i.e. responsibility) you’re willing to take if something happens. A limitation of liability is your primary shield, protecting you from claims should your service experience downtime or a bug.
• Acceptable Use: terms of use will prohibit users from reverse-engineering your product, scraping data, or using your platform for malicious purposes. While the terms of use won’t actually stop users from doing these activities, well drafted terms of use give you the legal recourse to take action and ban or block the user.
• IP Ownership: you’ve worked hard to develop your product and you need to ensure your intellectual property is protected. Good terms of use will ensure that you retain ownership of your intellectual property and also define who owns new content that is created. For example, if users can create images using your platform, the terms of use will define who owns those images.

2. Privacy Notice

While not technically a contract, a privacy notice is an essential legal document all startups need. If you collect any personal data (for example: names, emails, or usage data) you are a data controller and must comply with the various obligations under UK GDPR. The UK GDPR requires that any company collecting and processing personal data tells individuals how their data is used, the most common way of doing so is via a privacy notice (also called a privacy policy).

3. NDAs

If you are sharing confidential or other sensitive data with a third party, such as your suppliers, partners or even investors you should consider entering into a Non-Disclosure Agreement (or NDA).

While most contracts with such third parties are likely to include confidentiality provisions, you are likely to share sensitive information with such third parties before you enter into a full agreement. This interim period is where an NDA becomes essential, as it will be your only protection. 

The Sad Reality

While most founders realize they need terms of use, privacy notices and NDAs for their startup. Lawyers are expensive and legal template sites are usually complex and generic. And as a consequence, spending the time and cash to get these documents completed is usually low on the to-do list. 

While the risk might seem remote, UK companies lose £13bn in revenue every year for failing to tackle legal obligations and compliance. This is mainly due to unexpected costs due to litigation, lost business opportunities, and reputational damage. And it’s not just large companies, 28% of small businesses report losing business due to legal issues.

Why Flow Legal is the best option for UK Startups

Flow Legal is the next generation of legal assistants. It’s an all-in-one platform that helps founders create, manage and update their legal documents. 

Using Flow Legal is as simple as talking to a lawyer. After a few questions, Flow Legal will create high quality legal documents that are tailored to your business. 

The Flow Legal Advantage:

• Lawyer-Written Quality: Every document—from your Terms of Use to your Privacy Notice —is based on templates crafted by lawyers.
• Built to Evolve: As your startup grows from Pre-seed to Series A, your legal needs will change. Flow Legal makes it easy to update your documents to reflect your company’s evolution.
• Founder-Friendly Interface: Using Flow Legal feels like chatting with your lawyer. It’s simple, plain-English.

Don't let a lack of documentation stall your growth or scare off investors. Build your foundation on a system that is as innovative as your startup.