A contribution agreement is a type of a legal agreement which is framed or drafted when the parties involved agree to contribute or provide capital for a particular project or venture. This capital which is contributed is provided on the condition that the parties would receive in exchange equity shares of the company. These agreements are quite common to all businesses and are formally drafted with specified details.
A contribution agreement consists of the details of the involved contributing parties as well as details about the project they are contributing their capital in. The other major part of a contribution agreement is the part where the various clauses or terms and conditions are mentioned. These terms and conditions are the main stay of the agreement and cannot be violated under any circumstances.
Contribution agreements must be preferably drafted with the help of legal advisors as there is no scope for any mistakes or errors in these formal documents.
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