What Is a Strategic Alliance Agreement?
When you are working in a partnership or any form of alliance, it is suggested that working together in coordination with each other serves useful. This is the reason why a strategic alliance agreement is crucial in ensuring the overall success of a strategic alliance. In case your business or organization decides to share the respective resources as well as knowledge towards helping each other on a specific project, then you can go for drafting this agreement.
Why Do You Need the Strategic Alliance Agreement?
When you create an agreement in your business environment, it helps in solidifying the respective business plans. By using the given agreement, you can spell out the specific terms & conditions of the agreement between both the involved parties. The main role of such a contract between two or more parties is to pursue the given set of objects that are agreed upon for maximum success. Strategic alliance definition would be a form of collaboration or cooperation to bring about synergy to help the involved partners make the most of the given alliance. Given the cooperation both parties extend and the amount they invested as capital, this serves as equity alliance too.
Inclusions in the Strategic Alliance Agreement
While each agreement might differ depending on the individual business objectives, specific terms & conditions should be specified in the detailed documentation. Some of the essential inclusions of this type of contract include:
- The ownership of the project and the sharing of resources
- The amount of capital investment each party should put in
- The type of capital that the parties will bring into the project
- The ratio of sharing the profits or losses from the project
- The duration of the partnership
- The objectives of the partnership
- The events that count the conclusion of the partnership
- The method of premature exiting from the partnership
- Termination of contract
- Indemnification
- Rights over proprietary information
- Copyright use of one party of the other
- Brand use of the parties in marketing about the partnership
- The authority for executing contracts or obligations in a partnership
- Methods of resolving disputes between the parties
- Allocation of management duties
- Restrictions on the areas of operations
- Non-compete clauses
- Restriction on use of proprietary information after the conclusion of the alliance
How to Draft the Strategic Alliance Agreement?
If you are getting into a strategic alliance with some party or entity, it is recommended to draft the entire strategic alliance agreement properly. Some of the essential points to remember are:
- Name of the collaboration or partnership
- Parties or entities included
- Contributions to the given alliance
- Allocation of losses, profits, and draws
- Authority of each partner
- Management duties
- Termination of the agreement
Benefits of the Strategic Alliance Agreement
Some of the common benefits of entering into this agreement are:
- Opportunities for ample growth of each party
- Specifying the respective terms & conditions of each party in the given alliance
- Setting grounds for executing the alliance
- Serves to be a flexible form of contract for boosting the overall growth of organizations
Types of Strategic Alliance Agreement
There are several types of strategic alliance agreements that you can come across on professional grounds. Some of the common ones are:
- Short-term agreement
- Long-term agreement
- Formal agreement
- Informal agreement
- Horizontal strategic alliance
- Vertical strategic alliance
Inclusions in the Strategic Alliance Agreement
While drafting the strategic alliance contract, some of the important documents that you should look into are:
- Amount of capital investment
- Conclusion date
- Sharing of profits
- Allocation of duty
- Use of proprietary information, copyrights or brands for marketing
- Limitations on the areas of operations
- Non-compete and non-disclosure clauses
- Restrictions on the use of proprietary information after the end of the alliance
What Happens in Case of Violation?
In case of violation of any of the terms by an entity, the other party could consider terminating the agreement. The breaching party forfeits any rights to any receivables as part of the alliance. In case a party has access to any copyrighted material or proprietary information, then the injured party may ask for specific performance or seek injunction against any activity that breaches the integrity and trade secrets of the injured party. The injured party may also approach the courts for damages
[Also Read: Joint Venture Agreement]
Sample for Strategic Relationship Agreement
A sample of the agreement can be downloaded from below.
