ITC Collaboration agreement (contractual alliance)

Model collaboration agreement (aka cooperation agreement) for a contractual alliance or informal partnership between two or more parties. Addressing the key aspects of such collaboration.

The model collaboration agreement (or contractual alliance contract) is a framework for an alliance or collaboration between two parties where no separate jointly owned corporate entity is created. This model collaboration agreement was developed by the International Trade Centre (ITC) by a working group consisting of some 50 legal professionals worldwide. The alliance is based solely on the contract between the parties.

Each contractual alliance or collaboration is different. The model International contractual alliance provides a series or a “menu” of possibilities depending on the purpose of the alliance. Provisions that are not relevant to the particular alliance should be deleted.

The model contract contemplates that the two parties will share pro rata in the costs of the alliance. It is important to establish what types of costs are to be shared, especially to the extent it requires cash payments from the parties. If a party is to be paid for its work or other contribution, the basis for remuneration should be clearly established − either at the outset or through the management committee.

The model cooperation agreement for a contractual alliance contemplates the formation of a management committee on which the two parties are jointly represented. It may be appropriate in some cases to (i) spell out the authority of particular individuals or subcommittees, or (ii) ensure that certain “reserved matters” require unanimous decision.

Article 3 of this collaboration agreement contemplates that each party will have areas of responsibility to contribute towards the success of the alliance. In some cases these will be expressed in general terms − and not involve formal legal commitment (see the examples of article 3.3.1, 3.2.1 and 3.3.2). In other cases, specific legally binding commitment will be appropriate.

If the alliance is a joint development agreement, then article 4 (‘joint projects’) is helpful: the ‘organisation’ established by article 2 is attributed the authority to define the joint development work, to monitor it and the parties commit to fund such joint projects. Article 6 sets out provisions for a relatively straightforward sharing of knowhow and technical development. This ITC model collaboration agreement provides a framework of key points. It is prepared on the basis that specific IPR developed under the Alliance will be jointly owned and that “going to market” will require the consent of both Parties. In many cases, more detailed licence agreements will be appropriate to cover the IPR arrangements.

Establish the duration of the collaboration or alliance. Will it have a specific term with subsequent renewal requiring mutual agreement? Or will it continue indefinitely subject to a party’s right to terminate − either unilaterally by notice or in specified circumstances?

A collaboration agreement (or contractual alliance or cooperation) does not usually involve the creation of a separate profit-making business in which the parties share profits as well as costs. If the arrangements do involve income or profit-sharing, be aware of (i) the need for advice on the tax implications and (ii) the danger that, in many jurisdictions, each party could become jointly liable to third parties for any claims (caused by whichever party) arising out of activities of either party connected with the alliance.

If the venture does involve a separate profit-making business, this will normally require a more formal “partnership” agreement or the creation of a corporate joint venture.

This collaboration agreement (or contractual alliance) is a general framework only − and must be tailored to the circumstances of the particular alliance or collaboration.

The provisions in the (ITC model) corporate joint venture agreement may inspire the elaboration of this alliance contract (e.g. articles 5 (capital and further finance), 6 (directors and management), 7 (reserved matters for important decisions), 9 (additional contributions), 13 (restrictions on the parties), 14 (deadlock and termination)).

The ITC model collaboration agreement (or contractual alliance) can be downloaded in PDF format from the ITC website.