Consortium Agreement

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Consortium Agreement

A Brief Introduction About the Consortium Agreement

A Consortium Agreement is a legal document that is created when two or more parties are planning to engage with each other on a collaborative project to govern a number of issues. In the formation of this legal contract, there are usually two parties involved, but in certain scenarios, there can be more than two parties as well. This legal document helps both parties to understand the exact relationship the partners will share during the commencement of this project, the rights of each party, the obligations that they need to follow, and, most importantly the rules and regulations along with terms and conditions that will govern the collaborative project.

Who Takes the Consortium Agreement? – People Involved

In the formation of a Consortium Agreement, there are usually two parties involved. These parties want to engage with each other for the commencement of a joint venture or project, and thus, this document is created. In legal terminology, the first party is known as “The Coordinator,” the second party is known as the “Party or Leader,” and the agreement is simply referred to as the “Consortium Agreement,”

One of the most important aspects to note in the creation of this contract is the fact that the parties are always encouraged to think deeply and discuss among themselves before the creation of this contract, especially if this is the first time.

The overall purpose of a well-crafted Consortium Agreement is to minimize disputes and encourage smooth operation between both the parties and this can only take place when both parties are well aware of their individual rights, duties, limitations, and obligations.

Purpose of the Consortium Agreement – Why Do You Need It?

The main purpose of this agreement is to establish a legal understanding between both the organizations and to make sure that the interests of the individual parties, along with the collective, are protected at all points in time.

Some of the most important aspects to note about a Consortium Agreement are the following:

Since the purpose of this agreement is to remove barriers on a project level, all the partners, as well as the participants in the project, are expected and advised to contribute equally towards the collaborative cause at all times.

The rights to the work product, in this context the collaborative project that has been undertaken, is previously mutually agreed upon. After the project has been completed, the rights to the project will be equally distributed among all the partners, thus minimizing the risk of a hurdle or misunderstanding during or after the project.

It is always advised that during the creation of a Consortium Agreement, the partners be as thorough as possible in this content. This will not only in a smooth operation between the stakeholders but will also increase the efficiency and efficacy of those involved.

Some of the most important aspects that need to be covered during the creation of this agreement are as follows: Parties, Preamble, Definition, Implementation, Changes, Management, Financials, Provisions, Confidentiality, Liability among others.

In the Preamble section of the Consortium Agreement, both parties need to define the context under which the collaborative measures have been undertaken, the overall objective of the collaboration, and its scope. In this section, the parties also need to mention the name of the project and related acronyms that they might use so that all the stakeholders can be aware of the same.

Along with the details mentioned above, both parties need to define the exact relationship between the two parties, particularly about the organization and the collaborative project that has been undertaken. Details about the management of the project, the rights, obligations, representation as well as use of intellectual property need to be mentioned clearly so that the chances of a future dispute can be minimized as much as possible.

In the implementation section of the agreement, the outline of the project needs to be explained in general terms and also mention the presence of a technical annexure to refer to the definitions of technical jargon. Details such as the work package, allocation of tasks to both parties, planning of the project as well as milestones that need to be met are also addressed in this section of the agreement.

Most of the achievements that can be accomplished during the commencement of this project can be predicted beforehand, and the same needs to be outlined here so that all the concerned parties are on the same page. The technical responsibilities, including the amount of personnel that will be allocated by each party, the facilities that will be provided, the materials and equipment that will be required, need to be mentioned in this section of the document.

Details about the nature of assistance that both parties are entitled to provide need to be mentioned as well in this section. Along with this, the nature of the reports that will be generated, such as a financial report, technical report, work report, etc. needs to be mentioned. A mutually agreeable timetable needs to be drawn by the stakeholders in order to facilitate a safe, smooth, and efficient execution of the project.

Contents of the Consortium Agreement – Inclusions

Parties Involved: In this legal agreement, there are usually two parties involved; the first being the party who has proposed the joint venture and in this context, the creation of such a legal document, and the second party is the company, organization and or individual, who the first party wants to collaborate with. In legal terminology, the first party is referred to as the Coordinator, and the second party is referred to as the Leader or simply the Party.

Effective Date: This section of the agreement outlines the date from which this contract will stand legally binding and also the date on which the same can be dissolved.

Where does it Apply: This agreement is legally applicable within the boundaries of the state, city, or county where it was originally drawn at.

How to Draft the Consortium Agreement?

A Consortium Agreement can be drafted by simply following the steps mentioned below.

Organize a meeting both the parties and discuss upon the terms and conditions of the agreement, such as the details of the joint venture and or project that is being undertaken, the name, specifics, and credentials of the joint venture, the individual as well as collective responsibility of both parties, the terms, and conditions, along with rules and regulations that need to be followed by both parties.

Once both the parties have mutually agreed to all the terms and conditions, reach out to a lawyer and ask him to draw up a Consortium Agreement according to the specifications discussed.

Get both the parties to sign the contract and get it registered in a house of law, as suggested by your lawyers.

Negotiation Strategy

While negotiating the formation of a Consortium Agreement, it must be taken care that the individual interests of both parties must be addressed along with the collective cause.

Benefits & Drawbacks of the Consortium Agreement


The contract clearly outlines the individual responsibilities, duties, and limitations and therefore makes sure that both parties are well aware of them at all points in time.

This is document acts as legal proof and thus can be produced in court if there is a need in the future.


In the absence of a Consortium Agreement, neither of the parties have legal proof of an understanding taking place between two entities, and thus if the matter is ever brought to court, both parties stand to lose.

What Happens in Case of Violation?

In the case of violation of a Consortium Agreement, certain remedies come into effect, and in a few cases, the contract is dissolved(1), and a new set of terms and conditions are agreed upon.

While the cases of this agreement being violated are certainly less, there are, of course, certain situations, where terms and conditions might be violated, intentionally or unintentionally. In such scenarios, both the parties are always encouraged to talk things out among them and thereafter, draw a new Consortium Agreement. However, in certain scenarios, the intervention from a court is needed, and this being a legally binding document can be presented for the same.

The main purpose of a Consortium Agreement is to encourage a strong professional partnership either between two organizations or between two individuals while keeping in check that both parties are abiding by the mutually discussed terms and conditions.