Informal but binding: court recognizes agreement recorded on internal startup platform

The team at Prevence law firm – managing partner and attorney Edgaras Margevičius, attorney and partner Andželika Buivydė, and attorney Gabrielė Šinkonė – successfully defended the position of two startup founders in a case concerning the validity of an internal agreement. The court of first instance ruled that even an unusually formatted agreement – recorded on a private digital collaboration platform – can be considered legally binding.

This case serves as an important reminder that modern business relationships, particularly in startups, are often built through flexible, tech-based tools rather than traditional formalities. In a small partnership founded by three IT specialists, all important agreements were recorded on a digital collaboration platform used solely by the members. After leaving the partnership, one member contested one of these agreements, claiming it was merely an unofficial draft without legal power.

Our clients – the two remaining members – consistently maintained that this agreement on the consequences of a member’s withdrawal was genuine, mutually accepted, and reflected the parties’ original intent when forming the business.

The court examined the startup’s internal practices, how decisions were made, and how members interacted. It found that the contested agreement was documented on a members-only platform, edited by all, uncontested for a long period, and applied in practice. Despite being written in a mix of English and Lithuanian with informal expressions and jargon, the court concluded the agreement was understood by all parties and reflected their true intent.

This case highlights key legal principles relevant for today’s businesses – especially startups:

• Informally recorded agreements, if known, accepted, and tolerated by all parties, can carry legal weight.

• Language, form, or style (even mixed languages, slang, or casual phrasing) do not prevent a court from assessing the parties’ intent.

• Digital collaboration platforms (e.g., Confluence, Notion, SharePoint, etc.) are becoming legitimate spaces for decision-making and agreements.

• Implicit actions – such as silent approval, failure to object, or participating in editing – are valid signs of intent.

This is a significant win for our client. The court affirmed that agreements made informally on an internal platform may be legally binding if they reflect mutual intent.

It’s also a clear message to businesses and the startup community to assess how decisions are documented and whether communication formats clearly represent shared agreements.

The decision of the first-instance court may still be appealed. It is likely that the opposing party will pursue the case further, and we are ready to continue defending our clients’ interests and contributing to the development of case law.

Practical recommendations for businesses:

• Ensure that key decisions are documented clearly and in accessible formats.

• Periodically review your internal communication practices – what is considered binding vs. mere discussion.

• Consult legal professionals about structuring internal agreements and documentation.

This case is a clear example of how law is adapting to the realities of modern business.
Uncertain about the legal validity of internal agreements?

Contact us – we’ll assess it together.
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