Collaboration Agreement

What is a Collaboration Agreement?

A collaboration agreement is an agreement between two legal entities setting out the terms and conditions of a collaboration or cooperation in relation to a specific purpose or project. The agreement may also be referred to as a collaboration contract, a co-operation agreement or a co-operation contract.

When should you use a Collaboration Agreement?

A collaboration agreement should be used by any company contemplating a collaboration or cooperation with another company. The collaboration agreement can be used for all types of collaboration and cooperation regardless of business and sector.

The intention of this agreement is to set out the terms and conditions of the collaboration, including the purpose and scope of the collaboration, the parties’ mutual obligations and the obligations and/or deliverables of each party. It is important to clearly set out the obligations and expectations of each party to avoid misunderstandings and potential disputes. 

Why is a Collaboration Agreement important and why should you use a Collaboration Agreement?

Before starting a collaboration with another business, both parties should be in agreement as to the purpose and scope of the collaboration. It is also important that each party understands the expectations of the other party. A written collaboration agreement allows both parties to enter into a collaboration or co-operation effort with full visibility of the parties’ mutual obligation, and each party’s specific obligations and deliverables. This will save both parties a lot of frustration and avoid any imbalance in the collaboration (for example one party dedicating a lot of time, effort and resources into the collaboration, and the other party not doing anything). 

A well drafted collaboration agreement will also help you avoid costly and time consuming legal disputes that may arise in connection with the collaboration. For example, a collaboration may result in the creation of valuable intellectual property rights and it is important to regulate the ownership thereof beforehand to avoid any future disputes. A collaboration agreement will let you regulate the ownership of any such intellectual property rights, before it becomes an issue between the parties.

What are the common pitfalls of a Collaboration Agreement?

The most common pitfall of a collaboration agreement is the failure to properly define the scope of the collaboration and the obligations of each party. Whilst it may be tempting to dive in head first into an exciting business opportunity or venture with another company, it is strongly recommended that both parties thoroughly discuss, and set out in writing, a collaboration agreement which sets out the expectations of each party. A thorough approach to defining the obligations of the parties is key to achieving a well drafted collaboration agreement, as such obligations constitute the most central and important parts of the agreement.

Another common pitfall is the failure to regulate ownership of intellectual property rights. As mentioned above, a collaboration may result in the creation of valuable intellectual property rights, and it is therefore important that the parties agree beforehand the ownership of such rights.