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Expert in international corporate, IT, and crypto law. Has extensive experience in business setup and support in the USA, EU, LATAM, and the Middle East. Specializes in corporate structuring, compliance, KYC/AML, IP, GDPR, as well as regulation of crypto and fintech projects.
Agreement between partner companies
An agreement between partner companies is needed when two or more legal entities jointly attract clients, create a product, share income, or use each other’s resources. Prikhodko & Partners help choose the right cooperation model: framework agreement, agency or distribution agreement, joint venture, joint activity agreement, or corporate agreement. As part of business contract development, we translate verbal partnership agreements into a system of roles, finances, and controlled exit.
The word “partnership” itself does not define a legal model. One company may bring clients, another may perform the service, and a third may own the technology. If the contract does not delineate these roles, conflicts arise over revenue, the client base, IP, or the right to continue working after the cooperation ends.
Key points
- First, you need to choose a legal model, and only then the title of the contract.
- Roles, contributions, expenses, and the right to make decisions must be defined in writing.
- The income distribution formula must take into account refunds, taxes, and third-party expenses.
- The client base, brand, and results of joint work require separate regulation.
- Non-circumvention, confidentiality, conflict of interest, and deadlock clauses are necessary.
- The contract should predetermine the exit of a partner and the fate of current projects.
Which partnership model to choose
If one party only brings clients, a referral or agency agreement may be appropriate. For reselling a product, a distribution or reseller agreement is used. Joint product development requires rules regarding IP, financing, and management. If the parties create a separate company, corporate documents and a shareholders agreement are needed.
An incorrect model creates tax and operational risks. For example, “partner remuneration” may actually be a commission, payment for services, or profit distribution, and these are different legal concepts.
What must be established in the contract
- the goal and specific format of cooperation;
- the functions of each company and key KPIs;
- resources, personnel, technology, or financing;
- pricing, expenses, and the income distribution formula;
- rules for working with clients and leads;
- ownership of IP, data, and marketing materials;
- the procedure for approving decisions and budgets;
- confidentiality, non-circumvention, and conflict of interest;
- term, termination, handover, and dispute resolution.
Finances, clients, and transparent reporting
The payout formula should explain from which amount the partner’s share is calculated: from revenue, margin, net income, or funds actually received. It is necessary to consider refunds, chargebacks, taxes, platform commissions, and customer acquisition costs.
The contract must also determine who owns the contract with the end client, who is responsible for the result, and who can continue the relationship after the partnership ends.
Table: partnership cooperation models
| Model | What it is suitable for | Key document |
|---|---|---|
| Referral / agency | Transferring leads or concluding deals | Referral or agency agreement |
| Reseller / distribution | Reselling a product or services | Distribution agreement |
| Joint project | Joint resources and execution | Cooperation or joint activity agreement |
| Joint company | Long-term business and capital | Shareholders agreement and charter |
| License model | Use of a brand or technology | License agreement |
IP, brand, and non-circumvention
If partners jointly create a product, it is necessary to determine who owns the results, who can use them separately, and what happens after the project is completed. Joint ownership without rules often complicates sales, licensing, and investments.
A non-circumvention clause restricts bypassing the partner through direct contact with a referred client or supplier. Such a condition must define the protected circle of persons, term, exceptions, and liability, rather than prohibiting any activity in the market.
How to prepare a partnership agreement
- Describe actual roles, goals, and expected cash flows.
- Choose a legal model and check tax consequences.
- Agree on governance, reserved matters, and reporting procedures.
- Consolidate IP, clients, confidentiality, and conflicts of interest.
- Develop exit, deadlock, and dispute resolution mechanisms.
Conclusion
A partnership agreement is needed not because of distrust, but because of different understandings of the agreements. The more successful a joint project becomes, the more costly the gaps in the rules regarding clients, money, and control are.
Prikhodko & Partners develop cooperation, referral, distribution, joint venture, and corporate agreements for Ukrainian and international companies. The right model allows partners to grow their business without turning every financial issue into negotiations from scratch. Contact our specialists for reliable legal protection of your partnership!
Calculate the cost of services
1 question
Are you planning to launch a joint business or project with another company?
2 question
Does your company refer clients (leads) to another business for a percentage or reward?
3 question
Do you need help with the correct and safe distribution of profits among the participants of a joint project?
Is there a separate type of "partnership agreement"?
There is no universal model. The title is less important than the legal structure: agency, distribution, joint venture, license, or corporate agreement.
How to properly divide income between partners?
You need to determine the calculation base, expenses, refunds, the date the right to payment arises, and supporting documents.
Can I prohibit a partner from working with a client directly?
You can provide for a specific non-circumvention obligation if it is proportionate and complies with applicable law.
Who owns the client base?
This is determined by the contract and the roles of the parties. You can divide data ownership, the right of use, and personal data protection obligations.
What to do if partners cannot make a decision?
The contract must contain an escalation, mediation, casting vote, buy-out, or other deadlock mechanism.
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