What is a collaboration contract?
A collaboration contract outlines the terms and conditions of a commercial partnership, helping to prevent misunderstandings, disputes and legal complications down the line. Whether you're teaming up with fellow creatives, partnering with businesses or engaging in commercial joint ventures, establishing clear guidelines and expectations is crucial. One of the most effective tools for ensuring a smooth collaboration is a well-crafted contract. Find out more about collaboration contracts and how they can benefit your business here.
Key clauses to include in a collaboration contract
So, what exactly should you include in a collaboration contract? Let's dive into a comprehensive checklist to ensure your collaboration agreement covers all the necessary bases.
1. Collaboration
This type of clause will provide context to the agreement, by setting out each party’s obligations in relation to the project and how the parties will work together to achieve the project's aim. For example, as well as obligations specific to the particular project, this could include obligations on a party to:
obtain and maintain all licences, consents and approvals necessary to allow it to carry out the tasks allocated to it;
carry out the project in accordance with all applicable laws and regulations;
act in good faith towards the other party; and
use reasonable care and skill in performing its obligations.
2. Project management
A clear project management process is often included in collaboration contracts to ensure the collaborative project runs smoothly. This could include obligations to provide regular process reports, and pre-agreeing project management meetings at defined intervals (e.g monthly).
3. Exclusivity
If the project is exclusive (so neither party can work with others on a similar project) an exclusivity clause can be included in the collaboration contract.
4. Intellectual property rights
An intellectual property rights clause is often included in a collaboration contract so it is clear which party owns the intellectual property rights in relation to the project including (a) intellectual property rights in inputs each party provides for the project; and (b) intellectual property rights in the output created via the project. Some collaboration contracts will also include intellectual property rights indemnities - an indemnity is a contractual agreement between two parties that the party giving the indemnity will repay for any losses or damages caused if triggered by a specific event. Where a party will be using the other party's existing IP (known as "background IP") in connection with the collaboration contract, if a third party claims that such use of the other party's IP infringes their IP, the party giving an indemnity would be responsible for, and repay the other party for, any amounts incurred due to the claim.
5. Funding contributions
It needs to be clear how the project is being funded (including via external funding such as government grants) and this should be set out in writing in the collaboration contract.
6. Revenue sharing
If revenue that is being generated by the project is being shared, a clause to clarify how that revenue will be shared should be included. Often the revenue sharing arrangements will reflect the funding contributions e.g. if the funding contributions for the project were made 50/50 between the parties, revenue may also be shared on a 50/50 basis.
7. Confidential information
This clause is important to protect any secrets or sensitive information shared during the project. If the parties have already entered into a non-disclosure agreement (NDA) about the subject matter of the collaboration contract, then a confidentiality section may not be required.
8. Non-solicitation
This type of clause sets out restrictions to prevent a party from soliciting the other party's employees for the duration of this agreement and for a certain period of time after the agreement ends. In respect of this type of clause, ‘solicit’ means the soliciting or poaching of an employee of the other party with a view to engaging that person as an employee.
9. Records and audit
The parties may wish to include a right to inspect the other party’s records in relation to the project. This is known as an audit right. There may be limitations imposed in relation to the audit right (e.g. so it can only be exercised a certain number of times in any period and reasonable prior notice of the audit may also be required).
10. Data protection
If the parties are sharing personal data with each other when working collaboratively, the collaboration contract will often refer out to a separate data sharing agreement that governs the sharing of personal data.
11. Liability
A limitation of liability clause limits the amount a party has to pay to the other party if they suffer loss in connection with the agreement. It also sets out the types of losses that can be recovered if a claim is made. In the absence of a limitation clause, there is no financial limit on the damages a party can ask for, and it is therefore common to include a limitation of liability clause in commercial agreements.
12. Termination
The collaboration contract should set out each party’s rights to bring the agreement to an end early. It should also specify the consequences for both parties following termination.
13. Dispute resolution
A dispute resolution clause is common in a collaboration contract. It sets out the process by which the parties intend to resolve any disputes which may arise out of their contract. It may cover both contractual disputes (e.g. a difference of opinion as to the meaning and effect of a particular contract clause) and non-contractual disputes (e.g. where party A alleges party B was negligent in its performance of the contract).
How can Docue help?
All of the clauses listed above are included in Docue’s collaboration contract template. By including these key elements in your collaboration contract, you can help ensure a successful and mutually beneficial partnership. Remember, the goal of any collaboration contract is to provide clarity, protection and peace of mind for all parties involved. So use Docue’s collaboration contract template to easily draft a collaboration contract in just a few simple steps.
Want to try Docue for free? Signup Now!
Tags: collaboration contract, collaboration contract template.