"If your sales agreement slows the deal, it’s not protecting you - it’s killing your business." 

Matt Glynn - Director, GLS Group

Your sales agreements are your revenue engine. They’re not just legal paperwork- they are the tools that determine how fast, how cleanly, and how profitably you can close deals.

Yet too many founders treat sales agreements like a box-ticking exercise, recycling templates they don’t understand or letting lawyers produce overly risk-averse documents that scare customers away. This Station will flag why robust, commercial, and future-proof sales agreements are critical to your startup’s success- and what happens when you get them wrong.

This is an important stage of the start-up journey because:

◼️Revenue Enablement: Without a clear sales contract, you can’t invoice, enforce payment, or lock in delivery terms

◼️Risk Allocation: Well-drafted sales agreements define who bears the risk for delays, defects, or cancellations

◼️Brand Perception: Professionally written contracts signal to the market that you’re a credible, easy-to-do-business-with operator

◼️Speed to Close: Clear, plain-English terms avoid back-and-forth and help deals close faster

◼️Regulatory Compliance: In some sectors, sales agreements must meet specific consumer protection or licensing requirements

◼️Scalability: Standardised terms allow you to sell more without renegotiating from scratch each time

◼️Investor Confidence: Professional contracting processes are a green flag during due diligence

◼️Dispute Prevention: Clear scope, deliverables, and pricing reduce the chance of disputes later

The consequences of not attending to this issue may include the following:

Legal Implications

◼️Inability to enforce payment due to vague or incomplete terms

◼️Contractual uncertainty that impacts contract performance

◼️Failure to mitigate unreasonable legal exposures

◼️Failure to protect company IPR

◼️Inadvertently failing to conform to compliance obligations

◼️We cover the legal issues in great detail in the Start Up Centre

Founder Relationship Issues

◼️Arguments over pricing models, discounts, or scope creep

◼️Friction if one founder closes risky deals that others won’t support

Commercial Implications

◼️Customers walking away due to overly aggressive or unclear clauses

◼️Lost market opportunities due to slow contracting processes

Operational Implications

◼️Sales teams bypassing the legal process to close deals, creating hidden risks

◼️Poor record-keeping on contract versions and obligations

Biz Valuation Issues

◼️Lower valuations if investors see inconsistent or unenforceable revenue contracts

◼️Slower or failed exits due to unresolved contract disputes

The above lists are indicative issues – the relevance of which will depend on your circumstances…

Create a Commercially Balanced Template

◼️Keep it protective but simple enough for customers to sign quickly

Tailor for Your Industry

◼️Include only the compliance clauses relevant to your sector- don’t overload with irrelevant terms

Define Deliverables Clearly

◼️Avoid vague wording- be precise about timelines, milestones, and acceptance criteria

Cap Your Liability

◼️Include a reasonable liability limit, often linked to contract value

Standardise Processes

◼️Use a playbook for when and how sales teams can negotiate exceptions

Stay Digital

◼️Use e-signatures and a central contract repository for faster turnaround and version control

The above suggestions are just a few of the steps you can consider taking. There are many more things that need to be done to ensure the associated risks are effectively and pragmatically dealt with.

Some founders fear that putting contracts in place will slow the deal. The truth is, a sales agreement done right speeds things up- it removes ambiguity. Yes, some risks will never materialise, but removing the obvious ones from the start means you can focus on growth instead of firefighting.

Case 1 – Fyre Festival Vendor Contracts Disaster (2017)
This infamous startup-spearheaded festival signed vendor agreements that were vague, unenforceable, or missing entirely. When logistics collapsed, suppliers pulled out and refused to deliver without upfront payment. The absence of enforceable sales and supply contracts made recovery impossible, leading to lawsuits, bankruptcy, and jail time for the founder.

Case 2 – Zenefits’ Sales Compliance Crisis (2016)
HR software startup Zenefits grew rapidly but failed to ensure its sales agreements and licensing processes complied with state insurance laws. The fallout included regulatory fines, leadership resignations, and a forced slowdown in sales- a brutal lesson in aligning contract processes with compliance obligations.

Case 3 – Theranos’ Pharmaceutical Partner Fallout (2015–2016)
Before the fraud scandal fully emerged, Theranos lost key pharmaceutical and retail partners when its sales agreements over-promised on technology capabilities. The breach of performance clauses led to contract terminations and lawsuits, accelerating the company’s collapse.

As a start-up operator you may not be familiar with legal jargon relating to sales agreements:

◼️Force Majeure: Clause freeing both parties from obligations due to extraordinary events beyond control

◼️Limitation of Liability: A contractual cap on the damages one party must pay if things go wrong

◼️Scope of Work (SOW): Detailed description of services, deliverables, and timelines in a contract

Watch out for the legal jargon and refer to the knowledge hub for more plain-English explanations.

If you want to close deals faster, protect your revenue, and build market credibility, start with a sales agreement that works for you- not against you. The right contract is a growth enabler, not a legal brake. Weak contracts will cost you customers, capital, and credibility.