Collaboration Agreement

Collaboration Agreement FAQs

• Why is collaboration agreement necessary?

  It is not obligatory to have collaboration agreements, but they are recommended. It is naive to rely on verbal reassurances when investing your time and money into a collaborative project and want to have the desired results or else end up in a commercial contract dispute. A legal collaboration agreement enables you to pursue legal action and have some resources to manage the risk if the collaboration does not go to plan. Though verbal agreements are also valid in court law, without written agreement it is hard to prove the intentions of the parties when the contract is drafted.

• What does collaboration agreement usually include?

  The detailed collaboration agreement should include following essential elements:

  Details and scope of the joint project:

  A well-drafted collaboration agreement includes the specifications of the project and the obligations of all parties involved. The details and defining scope of the project ensures project parameters and minimizes the risk of any confusion arising later. As circumstances change, it would be beneficial to include a revision clause so that specifications can be amended as required.

  Collaboration Period:

  Add the term of the project to the main body of the agreement, along with the milestones and timings of the key deliverables. The collaboration timeframe can be fixed or ongoing until one party terminates the project.

  Confidentiality, Non-Disclosure & Permitted Use:

  In a joint venture, multiple parties share information as a part of a collaboration agreement. Every collaborator wants to protect confidential or commercially sensitive information, so the agreement should include a non-disclosure agreement and confidentiality provisions to build trust and facilitate open communication. For an undisputable collaborative agreement, it is recommended that the contract outlines to what extent parties can use any confidential information or collaborate with similar businesses competing with collaboration projects.

  Intellectual Property Rights:

  The nature of the project decides whether it is necessary to have detailed provisions on intellectual property in the collaboration agreement or make it part of the venture. Intellectual properties are of many types, including copyrights, trademarks, design rights, and patents. So, the agreement should protect the intellectual property owned by the participating parties before they sign the contract. Collaboration agreements often state the ownership of the intellectual property remains with the party who created and mentioned it in the collaboration. An IP license may also need to be issued to the parties, contractors, advisers, and consultants. The agreement should also cover how intellectual property will be treated if it is created during the project and also include provisions to deal with copyright or IP license infringement.

  Reporting & Project Management:

  Undeniably good collaboration depends on effective communication. Therefore, parties up for collaboration may want the agreement to set out formal reporting, high-level meeting schedules, and project management.

  Payments & Funding:

  Key provisions of the collaboration agreement must include how the project will be funded and the amount each party should contribute during the agreement. It is recommended to have provisions on:

  • What if more money is needed than anticipated?
  • What will happen if one party does not pay their agreed contribution?
  • When can each party expect the turnover or get their initial contribution back?
  • Penalties provisions in case of an agreement breach.
  • Indemnity provisions deal with the loss that a party may suffer in certain aspects of the project. For instance, in a manufacturing project, a warranty could be given that the supplied products would match the relevant regulatory criteria, or else they would provide an indemnity.

  Data Protection:

  The collaboration agreement needs to cover data protection provisions and the processes of how personal data will be shared, used, stored, or transferred if shared as a part of a collaboration. Moreover, The Data Protection Act 2018 also imposes obligations on businesses to protect any information that may reveal an individual’s identity.

  Disputes:

  If a dispute arises between agreed parties, the collaborative agreement should outline the agreed dispute resolution process. Also, if all parties have an equal say in project decisions, then in case of deadlock parties should know the process of decision making.

  Termination Plan:

  The termination strategy in any project is the critical term of the contract. Before investing, each party should know what will happen if the project fails, stalls, and goes wrong. The provisions include the process for the parties who want to end the project before completion or tie them for a specific period before they can opt to terminate.

  An agreement must have termination provisions if:

  • If the project target is not achieved.
  • If the other party violates the major agreement obligation.
  • Notice of termination should be given.
• What are the advantages of collaboration agreements?

  A collaboration agreement is effective for businesses to pool resources and expertise to achieve high economies, reduce costs, and mitigate risks.

  It provides a transparent framework to define the partnership’s goals, objectives, and project scope. A collaboration agreement also outlines the responsibilities and specific activities that ensure alignment and collective efforts toward a common purpose.

  A collaborative effort inherently involves sharing risks and rewards. It helps to mitigate potential risks by outlining mechanisms for sharing risks and dispute resolution procedures.

  Collaboration agreements aim to access new customers and expand market reach. By partnering with other organizations, your business possesses complementary strengths or has a presence in different geographical locations to trap new customers.

  Collaborating with reputable brands and well-built businesses can enhance your company’s image, customer loyalty, and reputation. A collaboration agreement ensures that the values, ethics, and quality standards safeguard the reputation and integrity of all involved.

• What are the tips for negotiating a collaboration agreement?

  A collaboration agreement is a legal contract between two or more businesses that outlines their joint efforts to achieve common goals. In this commercial contract, parties can negotiate on terms they want to include in the agreement. Your ability to negotiate terms mainly depends on your bargaining power.

  Some other vital negotiating tips for collaboration agreements are:

  • Work out your key objectives and what you want in this collaboration.
  • Make sure your agreement reflects your business needs and adapts to your industry or any industry regulations.
  • Have a realistic approach in negotiations and focus on the incentives you require to make your collaboration a success.
  • Ensure that your collaboration agreement clearly states who owns what at the end of the project.
  • Taking time to formulate the negotiation details as a detailed collaborative agreement with all the essential elements reduces the risk of a dispute or involvement in commercial litigation.