20 terms a founder or advocate actually meets — from indemnity and limitation period to SAFE, ESOP and vesting. Two or three sentences each, with a link to the page on this site that goes deeper.
Last reviewed: 2026-08-20. This glossary is a plain-English aid, not legal advice. It does not create a lawyer-client relationship and is no substitute for reading the current statute or taking advice on your own facts. The law is fact- and jurisdiction-specific — always check what applies under the law that actually governs your situation.
The things that must be done or be true before a deal closes — in a priced equity round they sit in the share subscription agreement alongside the subscription mechanics and warranties. In M&A diligence, CPs are extracted from the data room together with indemnity caps as part of the deal-format review.
One of the exit provisions of a shareholders' agreement, alongside ROFR and tag-along: when the majority sells, it can require — 'drag' — the remaining shareholders to sell on the same terms, so a buyer can acquire the whole company. It is the counterweight to the minority's tag-along.
A plan under which employees are granted options to acquire shares of the company, documented as a plan plus individual grant letters. ESOP terms are framed by company law and securities rules that vary by jurisdiction, and the gain at exercise is typically taxed as compensation income in the employee's hands.
A promise to save the other party from loss caused by the promisor's conduct or by any other person. In deals, the whole indemnity architecture of caps and carve-outs is built on it, and a contingent liability buried in an indemnity clause eventually surfaces in the accounts sooner or later.
The clause that transfers ownership of work product — code, designs, content, inventions — from the person creating it to the company or client. It is standard in employment and founders' agreements; a plain NDA handles confidentiality only and does not assign IP.
More on this — Intellectual Property practice area (India) →
The statutory deadline for bringing a suit, appeal or application. Each jurisdiction sets its own periods — by claim type, by the event that starts the clock, and by what can pause or reset it — so the applicable period always has to be checked against the law that actually governs the claim, not assumed.
The clause capping what one party can ever owe the other under a contract. A common SaaS position is a cap of twelve months' fees, with carve-outs — exclusions from the cap — for indemnity, confidentiality, IP infringement, data-protection breach, and gross negligence, wilful misconduct or fraud.
A sum named in the contract as payable on breach. Many jurisdictions will not enforce a named figure that amounts to a penalty rather than a genuine pre-estimate of loss — a distinction English law traces to Dunlop Pneumatic Tyre Co v New Garage & Motor Co [1915] AC 79 — so an eye-watering liquidated-damages number is rarely the win it looks like.
A contract obliging one party (one-way) or both (mutual) to keep shared information confidential, with defined carve-outs, a term and a governing law. A standard NDA handles confidentiality, not IP assignment; ownership of work product needs a separate IP assignment clause or agreement.
A clause restraining someone from competing after a relationship ends. Many jurisdictions test whether the restriction is reasonable to protect a legitimate business interest — English common law traces this restraint-of-trade doctrine to cases like Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co [1894] AC 535. Where a non-compete does not survive that test, confidentiality, IP assignment and a narrow non-solicit are what typically remain enforceable.
The narrower promise not to poach the other side's employees or customers for a period — often the fallback used where a broader post-termination non-compete would not hold up under the contract's governing law. It must be drafted narrowly to survive.
A contract between a company and its related parties — directors, key managerial personnel, or entities they control. Company law in most jurisdictions requires such transactions to get board or shareholder approval above certain thresholds, and requires directors to disclose their interest.
More on this — Mergers & Acquisitions practice area (India) →
The package of statements of fact a company or seller makes in a share subscription or acquisition agreement — about accounts, litigation, compliance, assets — which diligence then tests against the data room. When a disclosure schedule turns out to be untrue, the misrepresentation and fraud rules under the contract's governing law are the backstop.
More on this — Mergers & Acquisitions practice area (India) →
A transfer restriction in a shareholders' agreement: before a shareholder sells to an outsider, the shares must first be offered to the existing shareholders on the same terms. It sits alongside tag-along and drag-along rights in controlling who can enter the cap table.
An investment contract where money comes in now and converts to shares in a future priced round — the Y-Combinator post-money SAFE. Used at pre-seed and seed where founders want speed and a valuation cap without negotiating a full priced round.
The agreement among shareholders of a private company covering board composition, reserved matters, transfer restrictions — ROFR, tag-along, drag-along — and exit rights. It is where the real balance of power between founders and investors is written down.
A court ordering the contract actually performed instead of awarding damages — an equitable remedy available in many common law jurisdictions where damages alone would not fairly compensate the claimant. It is typically refused where the contract is compensable in money, depends on personal qualifications, or would require ongoing court supervision, and is subject to the applicable limitation period.
The minority shareholder's protection in a shareholders' agreement: if the majority sells its stake, the minority can join — 'tag along' — and sell on the same terms, rather than being left behind with a new controller. The drag-along is its mirror image in the majority's favour.
Use in the course of trade of a mark identical or deceptively similar to a registered trade mark, for the same or similar goods or services — the core test under most trade mark statutes. The same comparison typically applies at the registration stage too: a mark usually cannot be registered where it is identical or similar to an earlier mark for identical or similar goods or services.
More on this — Intellectual Property practice area (India) →
The mechanism by which founders and employees earn their equity over time rather than owning it all on day one, with a cliff — an initial period before anything vests at all. Founders' agreements pair the equity split with vesting and cliff terms and spell out what happens to unvested shares when a founder leaves; ESOP grants vest the same way.
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This glossary is a plain-English aid, not legal advice. It does not create a lawyer-client relationship and is no substitute for reading the current statute or taking advice on your own facts. The law is fact- and jurisdiction-specific — always check what applies under the law that actually governs your situation.
