When businesses or individuals work together on a joint venture or project, a collaboration agreement can provide a framework for their relationship. It will set out each party’s responsibilities and obligations and provide details of how funding will work and how products and any profits will be dealt with.
A comprehensive collaboration agreement will help to avoid misunderstandings and disputes. Should a disagreement arise, the agreement should govern how this is dealt with, for example, requiring the parties to attempt alternative dispute resolution before asking the courts to intervene.
What is a Collaboration Agreement?
A collaboration agreement is a binding agreement between two or more parties who intend to work together on a project. It sets out the scope of the project and the agreed terms and conditions.
When Do You Use a Collaboration Agreement?
You should use a collaboration agreement for any venture involving one or more other parties, even if you trust them to uphold their side of the agreement. Putting the details in writing will give you both the opportunity to clarify points that you may not initially have thought about and ensure that there is an accurate written record of what you have agreed upon.
Key Clauses in Collaboration Agreements
A collaboration agreement should be drafted by experienced commercial solicitors who will tailor it to suit the requirements of your project, whether it is a construction, tech or other type of venture.
Key collaboration agreement clauses include:
- Project Details – Set out what your intentions are and what you hope to achieve. The contributions to be made by each party should be specified.
- Funding Information – Details of how funding will be dealt with, including the contributions to be made by the parties, how further financing will be handled and what the penalties will be for not providing agreed funding on time.
- Agreed Reporting on Progress – It is usual to agree on a reporting schedule to ensure that the parties are kept up to date with progress made on the venture by each other.
- The Duration of the Agreement and How It Will Be Terminated – The agreement could have a fixed end date or continue until one party serves notice to end it. The process for serving notice will be set out in the agreement, and it is important to follow this when terminating.
- Confidentiality Provisions – Confidentiality is crucial when working with other parties. The agreement should specify how information should be treated and include clauses relating to confidentiality and non-disclosure.
- Data Protection – Similarly, data protection provisions need to be set out, and these must comply with relevant legislation as well as satisfy the parties that information will be treated with care.
- Ownership of Assets – The agreement should list how assets will be dealt with, including ownership of those created during the project, such as intellectual property or products.
- Dispute Resolution – Including details of how disagreements will be handled can avoid expensive litigation. The agreement can set out how deadlocks will be dealt with and an agreed form of alternative dispute resolution, such as arbitration or mediation.
- Non-Solicitation – In some cases, it may be advisable to include non-solicitation clauses that ban the parties from poaching employees from each other. This will generally extend beyond the end of the project, although it is important not to make the clause too wide, or it will be unenforceable.
- Termination Following Breaches of the Agreement – As well as allowing the parties to terminate the agreement on notice, you can also opt to allow termination if the terms of the agreement are breached. For example, if one party fails to meet their obligations within the agreed timescale, an option to terminate the project could be allowed.
The agreement should give comprehensive details about what happens in the event of termination, including funding, assets, clients and customers and debts.
- Continued Cooperation – Depending on the project, it may be necessary to continue working together for a period following the termination of the agreement. This should be agreed upon to allow the project to be wound up in a controlled manner.
The Benefits of Collaboration Agreements
Having a strong collaboration agreement in place will give you a roadmap for your project and allow you to discuss how you want to deal with potentially difficult issues at the outset. Going through all eventualities early on can avoid difficulties later and will ensure that everyone is happy with their role and understands what will be expected of them. This will go a long way to avoiding disputes.
Should a disagreement arise, the agreement will specify the process to be followed in tackling it. This will usually involve alternative dispute resolution, which is usually faster and more cost-effective than litigation. It can also help preserve relationships.
It is important to have a bespoke collaboration agreement drafted for your project and not to use a collaboration agreement template, as this will not generally provide enough detail or sufficient security.
Contact our Company and Commercial Solicitors
If you need advice on putting a collaboration agreement in place, contact us today, and we will be pleased to help.
To speak to one of our expert commercial contract solicitors, ring us at 0330 173 3980, email us at info@witansolicitors.co.uk or fill in our contact form, and we will talk through your situation with you and discuss how we can assist.
