Business collaboration agreements can be essential when you’re partnering with another company to drive growth or tackle ambitious ventures.
Whether you're joining forces with a complementary tech startup to build a new software platform, pooling resources for a joint research project in the pharmaceutical industry, or co-hosting a nationwide trade event, the success of that collaboration hinges on having clear terms from the outset.
A well-drafted agreement doesn’t just outline who does what – it protects your intellectual property, manages financial contributions and liabilities, and ensures a smooth path forward if disputes arise. We’ve advised businesses ranging from early-stage startups to established manufacturers on how to formalise collaborations in ways that support long-term success and limit future risks. By working with our experienced commercial law solicitors, you’ll receive tailored legal support that ensures your collaboration agreement is robust, fair, and fit for your commercial goals.
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What are collaboration agreements?
A collaboration agreement is a legally binding agreement between two or more businesses that wish to work collaboratively on a commercial project.
In most cases, a collaboration agreement will record:
- What the collaboration is about
- How the parties will work together
- How will the benefits of the partnership be shared
- The divisions of responsibilities and obligations
- Who owns the intellectual property rights
- Dispute resolution and termination clauses
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Our expert commercial law solicitors can advise, draft or review your collaboration agreement to help protect your best interests.
Are collaboration agreements legally necessary?
Collaboration agreements are not legally necessary, but they are highly recommended.
Putting a written commercial contract in place is a way to ensure that the risks you take are managed and that you have some recourse if the collaboration does not go to plan. Without a written agreement in place, it is far harder to prove the intention of the parties at the time the terms were entered into.
What is usually included in a collaboration agreement?
Our commercial solicitors have detailed the main terms usually included in a collaboration agreement:
Details of the joint project
Details of the project will typically be included in the agreement to ensure the project's parameters are clear. As circumstances can change, it may be sensible to include a review clause, allowing the details to be amended as required.
Collaboration period
The term can be for a fixed period or ongoing until terminated by one party. The accompanying schedule can provide a timeline of key project deliverables.
Confidentiality
Any collaborator will want to protect confidential or commercially sensitive information provided as part of the collaboration, so the agreement should include a non-disclosure agreement and confidentiality provisions.
Reporting and project management
The key to any good collaboration is strong communication. Accordingly, the parties to the collaboration may want the agreement to outline formal reporting requirements for each party and, at a high level, establish meeting schedules. The nature and extent of the reporting requirements will depend on the project specifics. For example, a collaboration to develop new technology may involve more extensive reporting and project management.
Payments by each party
Key provisions to include are those relating to how the project will be funded and the amounts that each party should contribute during the term of the agreement. It is best to drill down and include provisions on:
- What happens if more money is needed for the project?
- If one party does not pay their agreed contribution.
- When each party can expect to recover their initial contribution.
- Indemnity provisions against loss that one party may suffer in relation to certain aspects of the project. For example, with a manufacturing-based project, a warranty could be given by one party that the goods supplied by them as part of the collaboration meet the relevant regulatory criteria and provide an indemnity in case they don’t do so.
Intellectual property rights
Whether a collaboration agreement needs to include detailed provisions on intellectual property (IP) will depend on the nature of the project and whether it is intended to be used or created as part of the venture.
There are several types of intellectual property (IP), including copyrights, trademarks, design rights, and patents. Agreements often state that ownership of ‘background’ IP remains the property of the party that created it and introduced it into the collaboration. An IP licence may also need to be granted to the parties’ contractors, advisers or consultants.
The parties will need to specify how any intellectual property created during the project will be treated. For example, the IP could be jointly owned, or the lead party could own the intellectual property, but agree to grant the other party a licence to use the IP after the end of the collaboration.
Data Protection
The collaboration agreement needs to cover data protection systems and processes if personal data may be shared, used, stored or transferred as part of the collaboration.
Non-solicitation
A non-solicitation provision or restrictive covenant may be required if a party to the collaboration is concerned that another party might attempt to ‘poach’ their clients, suppliers, employees, sub-contractors or consultants. This provision may also include compensation payments payable by the party in breach.
Limitation of liability
Depending on the exposure of the parties in connection with the project and the resources of each party, it may be appropriate to include provisions limiting liability as a result of the performance or non-performance of obligations under the collaboration agreement. You could consider:
- Placing a cap on the total liability each party will have (usually defined as a monetary sum) in connection with the collaboration agreement.
- Excluding liability for losses that did not occur as a direct result of the event or claim.
Disputes
The collaboration agreement should specify the agreed-upon dispute resolution process. For example:
- If all parties have an equal say in project decisions, they might want to consider what happens if a deadlock occurs in decision-making.
- With a cross-border collaboration, the agreement should state which law and jurisdiction will determine a dispute and the preferred means of alternative dispute resolution (ADR), such as commercial mediation or international arbitration.
Termination arrangements
The termination provisions in a collaboration agreement are arguably some of the most important terms of the contract. Each party should carefully consider what happens if the project fails, stalls, or goes wrong, and what that means for them and their investment. The businesses also need to consider if any continuing collaboration will be necessary after termination of the agreement and for how long, and this should be reflected in the contract termination terms.
Tips on negotiating a collaboration agreement
A collaboration agreement is a commercial contract, and the parties are free to negotiate the terms they want to include. Your ability to negotiate terms will very much depend on your bargaining power, but negotiation tips include:
- Determine what you want to achieve through the collaboration and your key objectives.
- Ensure your agreement is bespoke to your business needs and tailored to your industry or sector, taking into account any relevant industry regulations.
- Spend time negotiating the details , as front-loading the legal work in drawing up a detailed collaborative agreement reduces the risk of a dispute over the terms of the agreement. It is cheaper to spend money on getting the collaborative agreement right than ending up in court because the agreement was not as comprehensive as it should have been.
- Be realistic in negotiations and understand the incentives necessary to make the collaboration a success.
Protect your business interests with expert support
Collaboration agreements often underpin high-stakes commercial relationships, so investing in the right legal advice from the outset can make a significant difference. Getting this wrong could result in costly misunderstandings, disputes over intellectual property, or uncertainty if the partnership is dissolved. That’s why businesses across the UK, from engineering consultancies to digital media firms, trust commercial law solicitors to draft, negotiate, and review their agreements with foresight and sector-specific insight. We can help ensure your collaboration supports, rather than risks, your business objectives.
