What are the legal implications in Y Combinator’s Template Sales Agreement?

I love 99.9% of what YC does.

I do not love their Template Sales Agreement.

Why? It was written by a lawyer at a Big Law Firm who almost certainly did not support a high-velocity inside sales team. And because of that, it is way, way too long, complicated, and liability-focused. It will create endless redlines, phone calls, and will get “forwarded to our attorney to take a look” by your prospects and customers. That’s fine for big enterprise-ish deals. But it becomes a big hindrance for sales in smaller, more transactional sales. In fact, if your prospect sends a $3k deal to legal to review … legal may be so busy, it just never gets reviewed. And the deal never closes.

If you need an enterprise-grade contract, go get one from a lawyer. You can start here with this form, for sure, for a $25k+ a year contract. It’s a good (if lengthy) start for that.

But if you are selling a $299 month product, or a $3k-$5k a year product, you don’t need 9 pages of T&Cs. That will slow down or even kill the deal. You don’t need to worry about (generally) all the nuances of export regulations, or SLAs, or Choice of Law, or all of this in the early days. Forcing a customer to do a press release as part of your default form? I mean, seriously??

What you need for transactional sales is the simplest possible 1 page contract, 2 page max if your product is < $5k a year.

Using this form will create a huge amount of friction in a standard, small deal that you just don’t need.

A happy medium sometimes for transactional sales is to just add the minimum necessary T&Cs and legalese to your website but not the purchase order / simple form contract for smaller deals. I.e., have the customers just sign the >first< page of the YC form, and turn it into a 1 page contract — and just reference the rest as standard T&Cs on your website. This isn’t as “good” as being in your contract from a legal perspective. But it’s something.

n.b.: not legal advice.

View original question on quora

Published on March 13, 2019

Pin It on Pinterest

Share This