A collaboration agreement is an agreement between at least 2 parties looking to work together on a commercial project on a collaborative or cooperative basis. The agreement spells out the specific terms and conditions of the parties’ working relationship including the allocation of responsibilities and division of revenues derived from the exploitation of the work. It helps the parties to enter into mutual cooperation and derive symbiotic benefit.
Purpose of Collaboration Agreement
A collaboration agreement helps to avoid uncertainties with your collaborator down the line, by clarifying the nature and scope of your relationship. Without a signed collaboration agreement in place, questions may be raised about the ownership and control of the works jointly created, as well as the ability to dispose of any rights in the work. It is also vital in determining what happens in the event when collaborators separate for any reason.
Inclusions in a Collaboration Agreement
A collaboration agreement, typically includes the names of the parties, the effective date, the duration of the contract (if a fixed term contract), renewal provisions, the purposes for which the collaboration is being done, the rights and obligations of the parties and the terms and conditions of collaboration. It also reflects the standard boilerplate clauses such as dispute resolution, waiver, notices, remedies and severability.
Key Terms in a Collaboration Agreement
The following are the key terms of a collaboration agreement:
- Purpose of collaboration: A collaboration contract essentially includes the purpose behind the coming together of the parties. For example, it may be a technical collaboration or a marketing collaboration.
- Duration/Term: It is preferred to have a collaboration contract for a pre-specified term. Such term should be specified in the contract.
- Resources to be contributed: An estimate of the number of resources each party shall contribute should also be included in the agreement.
- Intellectual Property: As trademarks are shared, it becomes imperative to have a clause which protects intellectual property of the parties.
- Risk mitigation: Clauses such as indemnity and limitation of liability also need to be included.
- Non-disclosure and confidentiality: Confidential information may be shared and hence a clause protecting the same needs to be captured in the contract.
Drafting of a Collaboration Agreement
Like any commercial contract, the output is generally as good as the input provided by the parties. That said, in regard to a Collaboration Contract, one needs to:
- Take care to negotiate the terms of participation at the outset;
- Discuss openly what is to happen at the end of the term and document this arrangement carefully;
- Consider what is to occur if the collaboration is successful prior to commencement, given the bargaining strength of the participants; and
- Ensure that the obligations contained in the collaboration contract are complied with and there is evidence of the same.
- Make sure to include intellectual property and confidentiality clauses.
- An event of default based termination clause should also be included.
- Draft remedies and dispute resolution clauses properly, as there may be scope for disputes.
Types of Collaboration Agreement
Following are the various types of collaboration agreements:
- Joint ventures: Typically entered into with a view to expand business.
- Technical collaboration: Entered into with a purpose to enhance research and development.
- Human resources collaboration: Such contract enables the parties to share their human resources. Secondment happens pursuant to such an agreement.
Pros of Collaboration Agreement
Following are the benefits of a collaboration contract:
- Personnel: One of the advantages of a collaborative effort between companies is the complementary ways in which personnel can enhance the relationship. For example, if your company has strong software development skills, and you collaborate with a company that makes high-end computer hardware, you both benefit from creating products with strong software and hardware components. Nonprofit organizations can also benefit from a collaboration by an increase in volunteers from the partner company.
- Marketing: A collaborative effort has two dedicated customer bases to market products to instead of just one. Both companies can use the opportunity to reach target markets that may have previously been difficult to sell to.
- New or improved services;
- More integrated or coordinated approach to beneficiary needs;
- Financial savings and better use of existing resources;
- Knowledge, good practice and information sharing;
- Sharing the risk in new and untested projects;
- Capacity to replicate success;
Cons of Collaboration Agreement
- One-Sided Effort: For a collaborative effort between organizations to be successful, both parties need to have something to offer to the relationship. If you are involved in a situation where your partner organization is receiving all of the benefits of your arrangement but not putting forth any effort in return, you are in a bad business arrangement. Before entering into a collaboration agreement with a company, take the time to make sure it can live up to its claims. Tour the company’s facilities to make sure it can be a productive partner.
- Cultural Differences: Cultural differences in a business collaboration are clashes in business philosophies. For example, if your company believes there should be a significant investment in market research prior to releasing a product, but your business collaborator does not, then the conflict could delay the release of a collaborative product or ruin the relationship completely.
Sample collaboration agreement
A collaboration agreement is used by the parties to merge their strengths and grow their business. Such an arrangement is susceptible to disputes. Hence, dispute resolution clauses should be drafted carefully.
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This agreement is made between the “Organization” and “Collaborator” on the effective date of 16th November, 2011.
Organization represented by
Mr. Sam Atherton
Address: 3403 West Circle Drive-57, Columbia City IN 46725
Contact number: (260) 244-2929
Collaborator represented by:
Mr. David Fishnell
Address: 265 3rd Avenue, Davenport ND 58021
Contact number: (701) 271-8255
Terms and Conditions:
- As per the “Collaboration Agreement”, the collaborator henceforth known as “Genesis” will conduct research and development and related activities keeping in focus the primary goal – Developing Content Management Software products. Such R&D should always be consistent and in accordance with various licenses mentioned in this Collaboration Agreement.
- The collaborating company “Simcorp” will be responsible for creating, preparation, analysis, and submission of the proposed “Development Plan” for the Content Management Software Program to “Genesis” for approval.
- “Simcorp” will also be responsible for managing this collaboration with “Genesis” and overseeing the development and smooth running of Content Management Software program.
- “Simcorp” is the final decision making authority related to creation, integration, and R&D of the program except for decisions that are related to the manufacturing and commercialization aspect of the product discussed in this Collaboration Agreement.
- “Simcorp” will be responsible for making the final decision with respect to all types of promotional and marketing activities related to the Content Management Software Product.
- The Collaboration Agreement including various schedules and exhibits can be amended partially or fully only by “Simcorp”.
IN WITNESS WHEREOF, the parties “Organization” and “Collaborator” have executed this Collaboration Agreement as on the date set forth which is 11/16/2011 (MM/DD/YY).
SIGNED FOR AND ON BEHALF OF ORGANIZATION BY:
SIGNED FOR AND ON BEHALF OF COLLABORATOR BY: