A Guide to Business Collaborative Contracting

INFORMED CONNECTED COMPETITIVE SUSTAINABLE///

A Guide to Business Collaborative Contracting

Major Projects Ready

P 2 DEPARTMENT FOR MANUFACTURING, INNOVATION, TRADE, RESOURCES AND ENERGY

MAJOR PROJECTS READY – A GUIDE TO BUSINESS COLLABORATIVE CONTRACTING FOR SERVICES INDUSTRIES AND SMALL BUSINESS

Contents

01 Introduction P3

WhatisaBusinessCollaboration? P3

02 FormingaBusinessCollaboration P4

Step1–IdentifytheOpportunity P5

Step2–AnalyseCapabilitiestoMeettheOpportunity P6

Step3–IdentifySuitableCollaborationPartners P8

Step4–IdentifyingandAgreeingaSuitableCollaborationModel P12

Step5–CollaborationGovernanceDesignandManagement P13

Step6–FormalisetheCollaboration P15

Step7–CollaborationTermination P16

03 LegalOptions P17

04 AppendixA–SampleMemorandumofUnderstanding P25

05 AppendixB–SampleNon-DisclosureAgreement P33

06 Notes P39

P 3

01Introduction

The purpose of this workbook is to provide small business owners and operators with the following:

• An understanding of what is involved in a business collaboration and collaborative contracting

• When and why such collaboration is useful to your business

• Steps required to implement collaborative contracting that meets your business needs

This workbook is designed to be read by an individual enterprise or a by a group of business owner/operators interested in working collaboratively together to win or undertake work.

WhAtISABUSINeSSCOLLABOrAtION?A Business Collaboration is an agreement between firms to do business together in ways that go beyond normal company-to-company dealings, but fall short of a merger or a full partnership. Or, more simply put, collaborations are agreements to work together in some fashion toward a common goal, project and organisational objectives. These collaborations range from informal “handshake” agreements to formal agreements with lengthy contracts in which the parties may also exchange equity, or contribute capital to form a joint venture.

A business collaboration is a way for small businesses to expand their client base and tap into new markets by partnering with other organisations to address skill or resource gaps, allowing them to bid for a wider range of work or for larger projects.

For many small businesses, collaborations are a way to stay competitive in today’s technologically advanced, ever-changing business world. These collaborations allow small businesses to pursue markets, customers, or ventures they could not do themselves. Many large companies are also creating business collaborations with those small businesses that can bring some critical expertise, product or service, technology, and/or market access that is outside the larger company’s core competencies.

These trends will positively impact those small businesses willing and able to change and work with other businesses and will negatively impact those who do not understand the rules of the game. These organisations also need to be adaptable and open to change given that these collaborative arrangements require a flexible approach to delivering outcomes.



The major elements of a Business Collaboration are presented below:

• A Business Collaboration brings two or more individual organisations together.

• A Business Collaboration requires these parties to be interconnected in some way with resource dependencies with both parties benefiting from sharing these resources.

• The collaboration must share consistent goals, interests, or values.

• There is an assumption that the individual parties maintain at least some level of autonomy and continue operating their normal business activities alongside the collaborative business activities.

Accordingly, business collaborations represent arrangements that have emerged or have been purposefully established to leverage the partners’ resources and capabilities so that their strategic performance can be enhanced and the client is provided additional value due to the parties coming together. Beyond the partners’ contributions of resources and capabilities, collaborations involve governance structures and commercial arrangements that facilitate collaborative interaction among partners.

Below is a typical process a group of parties would undertake when forming a business collaboration:

02FormingaBusinessCollaboration

1 Identifytheopportunity

2 Analysecapabilitiestomeettheopportunity

3 Identifysuitablecollaborationpartners

4 Identifyingasuitablecollaborationmodel

5 establishrelevantcollaborationgovernanceandmanagementrequirements

6 Formalisethecollaboration(ifrequired)

7 Collaborationassessmentandtermination

P 5


SteP1–IDeNtIFytheOPPOrtUNItyBusinesses may enter into a collaborative arrangement for a number of different reasons which may include:

• Gaining entry to specific or new markets;

• Delivering innovative new technologies or processes;

• Reducing financial risk of research & development;

• An identified client need for partners to come together to deliver a project;

• Allowing pursuit of broader or larger scopes of work;

• Achieving competitive advantage.

eNterINgNeWMArketS

Partnering with a company can make the expansion into unfamiliar territory a lot easier and less stressful for a company. Research has identified growth strategies and entering new markets as among the top reason for forming strategic collaborations. Therefore, forming a Business Collaboration with a company already in a target marketplace is a very appealing strategy to enter in to a new supply chain, major project or market.

DeLIverINgINNOvAtIveNeWteChNOLOgIeSOrPrOCeSSeS

Not all companies can provide the level of innovation or technology that they need to effectively compete on their own. By pooling resources to jointly deliver innovative technologies, all partners receive benefit from the collaboration.

Another reason for forming strategic collaborations is to outsource business functions to a company which can do it better and lower costs. This can include: marketing, production, accounting, sales, or virtually any other process. Indeed, many companies are forming collaborations looking for the best quality or technology, or the cheapest labour or production costs.

reDUCINgFINANCIALrISkOFreSeArCh&DeveLOPMeNt

To help maintain innovation, some companies may find that the financial risk involved in developing a new product or production method is too great to undertake alone. In such cases, two or more companies may agree to spread the risk between all of them.

ANIDeNtIFIeDCLIeNtNeeDFOrPArtNerStOCOMetOgether

There may be instances where companies are requested by a client to work together in a collaborative contract. For example, a design and construct project in which the client tenders for the package may involve a design firm finding a construction firm they can partner with to deliver the works.

ALLOWINgPUrSUItOFBrOADerSCOPeSOFWOrk

Partnering with another organisation may allow businesses the opportunity to pursue larger or more complex projects. In particular, it allows specific skills or resource shortages of one business to be filled by collaborating with another business.



AChIevINgCOMPetItIveADvANtAge

Small businesses can compete against larger firms by creating collaborations with other companies, both large and small, on a project-by-project basis. This can be strategic in both removing some of the competition and bolstering skills and capabilities.

In any event, the first step is in identifying whether an opportunity exists in which a Business Collaboration may ultimately lead to increasing chances of a successful outcome.

SteP2–ANALySeCAPABILItIeStOMeettheOPPOrtUNItyIn most sectors of procurement, competitive bidding is the norm for all except small, low-value and low-risk assignments.

IDeNtIFyINgStreNgthSANDWeAkNeSSeS

An analysis of your business’s strengths and weaknesses allows you to identify what gaps you have in meeting the requirements of the opportunity. This gap analysis will also give you the search criteria for identifying one or more strategic partners for the immediate and long term opportunities identified.

MAtChtheBIDtOtheOPPOrtUNIty

It is important that businesses look at the bidding process from the client’s perspective. The Client sees the purpose of the bidding process as a way identify accurately and reliably the contractor most likely to deliver the best value and achieve the best results. A bid from a business that clearly understands this perspective is more likely to succeed than one presenting only the contractor’s point of view.

The bid response has to show that the bidding business:

• Thought hard about the client’s requirements,

• Interpreted them accurately,

• Developed the bid specifically for that opportunity, and

• Exercised care in its preparation, and that it was not just patched together using copy and paste commands.

There is little point in submitting a bid unless it has distinctive benefits to offer the client. The bid must demonstrate that it is competitive as possible in terms of both technical quality and value for money.


P 7


DeterMININgSPAreCAPACIty

After careful analysis of the opportunity, you should be able to determine if you have “spare capacity” in your existing operation to meet the new opportunity. If don’t have this capability or capacity, do you need to obtain capacity from outside your business? It is important that you don’t over extend your capacity so that you cannot supply to your existing customers. It is no use going through all the effort of undertaking new opportunities at the cost of servicing existing customers.

Identifying your businesses gaps both in terms of skills and resource capacity will allow you to:

• Determine whether you should pursue this opportunity

• Determine whether this opportunity lends itself to partnering, and if so, what skills/capacity you need in a potential partner

EXISTINGCUSTOMERS

NEWCUSTOMER

Majority of Capacity

Spare Capacity

PRO

DU

CTIO

N



SteP3–IDeNtIFySUItABLeCOLLABOrAtIONPArtNerSThe search criteria for partners should include businesses with compatible cultures, shared values and long term interests. The time spent searching for compatible parties reduces possible future conflict within the collaboration. Collaboration partners are likely to be competitor(s) or suppliers who are interested in expanding into this new market or sector which you could jointly bid for the immediate and long term opportunities identified. Partners should bring knowledge, patents, proprietary knowledge, process, capital, workforce skills or other expertise that you do not have.

AreALLthePArtNerSOFASIMILArSIzeANDCAPABILIty?

Collaborations between firms of different sizes are often justifiable as the smaller firm may share its innovative technology with a larger firm that is offering finance, marketing, distribution etc. Care should be taken however in ensuring that the larger partner does not dominate the collaboration to the detriment of the smaller collaboration partner. The smaller collaboration partner must also consider the risk of over commitment to one project. It should also be noted that business size does not necessarily dictate the lead party for a particular assignment. Dependent on the job and skills required, it could be a smaller company leading a business collaboration with a larger firm.

rISkSWheNFOrMINgABUSINeSSCOLLABOrAtION

A suitable collaboration model will depend greatly on the degree of risk which the partners are prepared to undertake. This acceptance of risk will also depend on the rewards on offer from the identified opportunity.

Preliminary discussions should explain in detail each partner’s commitment in terms of resources, time, and energy. Each partner should know exactly what it needs to do. A good idea may be that the partners working together on small projects first to learn more about each other before committing too many resources (time and money).

Also, think about the benefits and attributes you bring to a relationship and then consider what characteristics and strengths you’d like in an ally. Seek out candidates that match or come close to that desired profile. Identify what’s in it for your partner before you try to develop a collaboration. If you help your partner get what they need, they’ll help you get what you need.

A values and culture fit is critical for a Business Collaboration partner. Even if you have gaps in capability, if there is not a similar approach to undertaking business, shared values in how you work and a one team approach, even the best intentioned collaborative arrangements will not be effective. This focus on values and culture is critical as part of the selection of any collaboration partner.

DISCLOSUre

There is a natural tendency to be guarded about what resources, information and processes prospective collaboration partners are prepared to share. Partners must decide at the very beginning what that are prepared to share and what they will not share. Prospective partners may need to be prepared to share financial information, market knowledge, production processes, supplier information, existing and future intellectual property etc.

If the parties are concerned about the disclosure of confidential information it is recommended that a Non-Disclosure Agreement is entered into. A sample Non-Disclosure Agreement can be found in Appendix B.


P 9


Research has shown that between 50% and 70% of all business collaborations fail. The following is short list in order of importance of the reasons why business collaborations have failed and possible ways of preventing these failures:

reasonforFailure PossibleSolution

Clash of cultures and “incompatible personal chemistry”.

Note: Cultural problems can consist of language differences, clash of egos and different attitudes to business.

Spend time before setting up the collaboration with leaders from the prospective partner business. Understand what their drivers are, what is important to them and what their vision is. This will give a good idea upfront as to whether this is a good prospective collaboration partner or not.

Identify what united leadership looks like for the collaborative arrangement. Spend time identifying where there are differences in your approach to clients, projects and pursuits.

Being clear upfront about who is responsible for what and how the collaboration intends to operate will also help to reduce likelihood of potential clashes.

Once in a Business Collaboration, if these issues arise, try to empathise with prospective partners. Empathy means directly identifying with another’s situation, feelings and motives. Empathy can be a powerful ally when trying to sway someone toward your way of thinking.

To deepen your level of empathy and increase the likelihood of creating a great strategic collaboration, start by learning all you can about the collaboration firms and their current challenges.

Lack of trust Building trust is the most important and yet most difficult aspect of a successful collaboration.

Ensure that the collaboration is fair on all parties of the collaboration.

Work through the risk allocation up front between the two parties. Where risks are to be shared, ensure this is clear and also ensure those risks that are allocated to each party are documented and appropriately managed

Be transparent about your work in regards to the particular job you are collaborating on.

Spend time upfront to get to know each other and agree on how things will be undertaken.

Continued ...



... Continued

reasonforFailure PossibleSolution

Lack of clear goals and objectives

The collaboration partners must know what they want to achieve and be clear about their involvement in a business collaboration.

Clearly document and sign-off on client and project objectives and outcomes.

Ensure objectives of the collaboration are compatible with those of the collaboration partner’s strategies and objectives.

Lack of coordination between management teams

Collaboration partners must not undertake activities that would damage the collaboration. For example, a partner that continues to market products or services to the detriment of the collaboration partners where this has been explicitly agreed.

Differences in operating procedures and attitudes among partners

There must be clear alignment of procedures and systems to ensure that milestones and deliverables are meet. For example, a partner that delivers late due to a procedural hic-up can build mistrust and severely damage the collaboration.


P 11


COLLABOrAtIONPArtNerCheCkLISt

Below are some key questions when selecting a collaboration partner:

QUeStION y N

Are my business goals aligned with the prospective collaboration partner’s strategic goals?

Does the collaboration partner have complementary skills and resources?

Are all the partners of a similar size and capability?

Is there values alignment between the two parties?

Is the objective of the collaboration clearly identified by all parties?

Does the prospective collaboration partner have a similar operating culture?

Does the collaboration partner have sufficient financial resources to maintain the venture’s efforts?

Does the partner have identifiable systems, processes and procedures to support the collaboration?

Does the partner have aligned management teams?

Is there an appropriate governance structure in place for the collaborative arrangement?

Is there a good level of mutual dependency?

Is there a good level of communication between the partners?

Is there a plan to ensure regular communication is happening through the works?

Will partnering with this business increase our chances of winning this work?

Are we clear on the terms of this collaboration, who will provide what and how we will work together?



SteP4–IDeNtIFyINgANDAgreeINgASUItABLeCOLLABOrAtIONMODeLCollaborations can take various forms, from long-term R&D joint ventures with equity stakes to loosely agreed short-term marketing partnerships. Two broad classes of collaborations can be differentiated: non-equity and equity collaborations.

a) Non-equitycollaborations: these collaborations are generally based on contractual agreements or memorandums of understanding and entail any form of cooperative relationship between two or more firms. These agreements are based on the informal interactions of two or more firms or are the result of purposefully establishing a collaborative organisational relationship. Examples include long-term supply relationships, licensing arrangements and distribution agreements.

b) equitycollaborations: these types of collaborations involve the creation of a separate new entity (i.e., the joint venture). Joint venture partners provide financial capital and other resources to the newly created firm, which typically has its own management team reporting to a board composed of representatives from the joint venture partners.

exAMPLeOFCOLLABOrAtIONS

Collaborations can between occur between two or more companies, for instance:

• Asalescollaboration occurs when two companies agree to go to market together to sell complementary products and services.

• Amanufacturingcollaboration may occur when one or more manufacturers agree to build different components based on the relative manufacturing strengths and production scale. For example, Company A furniture company has high speed machines to output parts while Company B provides hand-carved embellished components and Company C assembles, markets and dispatches the furniture.

• Asolution-specificcollaboration occurs when two companies decide to jointly develop and sell a specific marketplace solution.

• Ageographic-specificcollaboration is developed when two companies come together to jointly market or cobrand their products and services in a specific geographic region. With a strategic aim focused on selling solution-specific products to a particular region, for example, there can be overlap with respect to the type classifying collaborations.

• Aservicecollaborationoccurswhentwoormoreservicebasedcompaniesagreetojointogethertoidentifymarketopportunities,bidforandsecureworkinaparticulartargetmarket.

tAkeyOUrtIMe

Once you have gone through the collaboration partner selection process, it is not always advisable to enter into an collaboration immediately. An initial period could be used for firms to cooperate in some informal activity before formalising agreements. This can be documented through a informal teaming agreement. Such cooperation may then lead to a more enduring partnership or collaboration. This incremental approach enables managers to keep adding to the complexity of things that they trust a partner to do on the basis of previous experience. Such an approach keeps the expectations of a partner lower, and enables managers to be more analytical in assessing why a particular venture did not work out.


P 13

SteP5–COLLABOrAtIONgOverNANCeDeSIgNANDMANAgeMeNtThe organisation and functioning of collaborations is affected by the contractual agreements that have been put in place, and the resulting governance structures and leadership behaviours of the collaboration partners. While the contract is concerned with the allocation of risks and trading gains resulting from exchanges between cooperating partners, governance refers to the chosen institutional context in which the collaboration takes place. Although governance and contractual form are related, they are uniquely different. Collaboration governance is concerned about the following aspects of the collaboration:

a) The patterns of authority and influence that determine the use of collaboration resources and the integration of collaboration partner interests.

b) Organisational structures of the collaboration (if joint venture is created).

c) The management of collaboration coordination and relevant procurement costs.

d) Management of and assignment of intellectual property developed as part of the collaboration (see below).

e) The determination of collaboration task-scope, division of labour, task complexity and inter-partner diversity.

COLLABOrAtIONLeADerShIP

Leadership influences the process that facilitates the performance of the collaboration team and is shared among the partnering firms. A characteristic of leadership in the collaboration is the practice of informal leadership. An informal collaboration team leader is one who, without authority, exerts influence over team members by interpreting events, setting goals, and giving feedback. Formal and informal leadership can significantly affect the performance of collaborations both positively and negatively.

MONItOrCOLLABOrAtIONPrOgreSS

The collaboration must establish the appropriate performance measures that are linked to the collaboration’s strategic goals. Then, systems must be in place at the collaboration level and at the partner level to collect information and evaluate those measures. Partners should generally receive the following information regarding the business collaboration:

1. Financial contributions by all parties

2. Revenues received

3. Achievement of Critical Success Factors and key result areas

4. Report on any governance and management issues affecting the collaboration

Someone senior within each partner’s organization should be assigned the responsibility for receiving, studying and evaluating the information received from the collaboration partners.




MANAgINgINteLLeCtUALPrOPerty

Careful consideration should be given to any intellectual property (IP) as part of the collaboration. There are three development stages of the collaboration where IP issues could arise:

1. Pre-contractual stage (before the parties sign the legal documentation establishing the JV or collaboration);

2. Operational stage (on signing of the legal documentation);

3. Termination stage (on termination of the key obligations between the parties under the legal documentation).

Pre-ContractualStage

This stage relates to the protection of existing IP, including confidential information. Parties must be careful to protect any information that they may need to share during negotiations, particularly where the other party is an actual or potential competitor and there is a risk of misuse by the other party or a third party. Before sharing confidential or otherwise sensitive or valuable information it is usually advisable to enter into a written confidentiality agreement or non-disclosure agreement. This agreement will typically require both that information (i) is not shared with third parties and (ii) is only used for the purposes of negotiating the formation of the JV or collaboration. Partners should also define what IP they will not be contributing to the collaboration. This is referred to as ‘backgroundrights’, which were not created in the course of, or for the purpose of, conducting the collaboration.

OperationalStage

This covers the protection of existing (declared) IP and that IP which may be developed as part of the collaboration. Ownership of IP rights developed in the course of the JV or collaboration must be determined. Future rights that have been developed in the course of the collaboration or by either or both partners, or which are directly relevant to it, are referred to as ‘foregroundrights’. The parties must also consider who will be permitted to exploit those foreground rights, making proper arrangements for their management and maintenance.

terminationStage

Collaborations almost always come to an end, often sooner than expected. This being so, the parties should consider (i) how to deal with foreground rights assigned or licensed to or by the collaboration, or between them; (ii) what to do with background rights; and (iii) whether and how the circumstances of termination could affect the agreed allocation of rights.


P 15

SteP6–FOrMALISetheCOLLABOrAtIONOnce you’ve selected your potential collaboration partner(s), you can then agree on who gives and gets what, when, where, and how. It is now time for identifying, understanding and putting together the possibilities for the collaboration. Mutual performance measure can now also be identified and developed. Internal and external personnel (lawyers, experts etc) may be involved in developing not only your collaboration structure, but also your road map.

Some parties may choose not to formalise their collaboration, dependent on the nature of the relationship and the extent of work involved. For example, some parties may be satisfied with a memorandum of understanding (MOU) outlining how they intend to work together. Parties need to weigh up the risk and specifics of the particular work in determining whether or not to formalise their agreement. A template MOU is attached to Appendix A.

In some instances, parties may also choose not to formalise their agreement until work has been secured.

Experts advise coming up with a contract or letter of agreement that outlines the terms of the collaboration, including how each organization will share in the revenue and expenses, as well as a strategic plan that defines how the collaboration will work and be implemented. It is recommended to clearly identify the pathway for achieving your common goal(s). The collaboration agreement should include:

1. The roles and responsibilities of each party

2. The allocation of decision rights

3. The ownership structure (if joint venture)

4. The arrangements for different unforeseen events

5. The policies and procedures for communication and determination of conflicts or issues that arise

6. Exit strategies

7. A mechanism to handle price increase

8. Any regulations on various legal matters, e.g. confidentiality and nondisclosure agreements, ownership and licensing of intellectual property rights and indemnity provisions.

For example, a proposal could be that Company A provides the equipment for a tender and Company B implements and manages the service delivery i.e. installation, maintenance and ongoing support. This value added service, by Company B gives both parties a competitive advantage for the tender.




SteP7–COLLABOrAtIONterMINAtIONPartner should plan their termination strategy from the very beginning by specifying in the initial agreement what happens to assets, customers and existing contracts at the end of the life of the collaboration. Collaborations may terminate for any number of reasons:

• The collaborative relationship may break down

• Failure to achieve objectives

• Expiration of term of the collaboration

• Change in control of any collaboration partner

• The collaboration may accomplish its mission and therefore outlive its purpose

• Adverse action by regulatory authorities

• Partner strategies may change thus eliminating the need for the collaboration.

The terms on which a JV or collaboration may terminate, or on which one party’s involvement might cease, should usually be agreed in as much detail as possible at the outset. There is a great deal of value in knowing that there is a clear way out of the collaboration if need be, and in knowing how shared assets will be distributed or disposed of if a partner exits.

Given that a collaboration may have ended its purpose and all parties obtained the desired outcome, there may still be a number of obligations created during the formation and operation of the collaboration. Below is a list of some of these obligations which may need attention:

• Insurance: Product liability, professional indemnity, public liability insurance and other forms of insurance, can be required to be maintained for a number of years. Depending on the nature of the collaboration, one or all the parties will require to maintain their insurance commitments.

• IntellectualProperty: As discussed above, any IP created as a result of the collaboration or background IP will need to be managed and royalties assigned for a number of years.

• Maintenance: Ongoing maintenance and support of some elements of the contract may need to be managed by one or all the collaboration partners.

• Joint&severalliability: Where two or more persons are liable in respect of the same liability, they may either be: jointly liable, or severally liable, or jointlyandseverallyliable. If the collaboration collapses and has outstanding liabilities then creditors under joint and several liability clauses may pursue an obligation against any one party as if they were jointly liable. It then becomes the responsibility of the collaboration partners to sort out their respective proportions of liability and payment.

Finally, keep in mind that collaborations end, and endings are not necessarily failures. The only thing that counts is whether a collaboration fulfilled its strategic purpose before termination.


P 17

There are a number of legal options that can be used to implement collaborative contracting. The main legal options available are given below:

• Lead Contractor

• Strategic Business Alliances

• Co-operatives

• Unit Trusts

• Joint Venture (Unincorporated)

• Limited Liability Company (Incorporated Joint Venture)

The above legal options range from a simple lead contractor to the more complex creation of an incorporated joint venture using a limited liability company. We have provided the relative advantages, disadvantages and examples or how the different collaboration options can be used. We have also provided indicative costs and time implications for establishing these collaborations. Note that costs are estimates only and will depend on a number of factors relating to the number of possible collaborative partners, the level of legal complexity the partners may wish to undertake etc.

LeADCONtrACtOrMODeL

Description

The traditional model for two or more parties coming together to deliver a job. On organisation (the Lead Contractor) will project manage the delivery of the project and engage other specialist companies as subcontractors. The appointment of the lead and subcontractors will depend on the skills and experience of the parties in undertaking a project of that nature.

WhentoUse

As a subcontractor it is best to utilise this model when you want to win a particular job or work in a particular market but don’t have the established market share to bid for work on your own. Working with a larger company means you can leverage their reputation to get a foot in the door to working with new companies and in new markets.

Advantages

• Access to big name clients

• Negotiations with the client are generally done for you by the Lead Contractor

• Allows for specialisation – you can focus on core capabilities

• Opportunity to obtain complementary capabilities through on the job experience

• Securing the work is handled by the Lead Contractor – minimises business development expenses

• Less administrative burden – these are borne by the Lead Contractor

03LegalOptions



Disadvantages

• The Lead Contractor will take a portion of your pay from the client

• Lack of exposure to the client

• Risk transfer from the Lead Contractor

• Difference in bargaining power between Lead Contractor and Subcontractor

• Can be a more adversarial type relationship than other models

• Potential for scope creep if not managed properly which can reduce profit margins

CostImplications

Minimal upfront costs.

As a subcontractor the only costs you would incur would be in having a lawyer review the subcontracting document (if necessary).

StrAtegICBUSINeSSALLIANCeS

Description

A strategic business alliance is basically an agreement between two or more organisations that they will work together to explore opportunities and bid for work on a project by project basis.

WhentoUse

There are a group of companies that are not in direct competition, but offer similar products and services or appeal to the same target audience who wish to work together over a longer period of time on the delivery of a number of different projects.

This type of agreement can be informal through a memorandum of understanding or formalised through the creation of a legally binding document such as a business alliance agreement.

Advantages

• Gain competitive advantage through access to a partner’s resources, including markets, technology, capital and personnel

• Fills gaps in technical expertise or knowledge

• Direct combined competitive energies towards defeating mutual rivals

• Can reduce the cost and make it more efficient to penetrate markets through joint efforts in areas like research, technology sharing, marketing and promotion

• Economies of scale

• Sharing of complimentary resources and capabilities, enabling participants to grow and expand more quickly and efficiently

03LegalOptions

P 19

Disadvantages

• Can be time consuming to establish communication mechanisms, building trust and co-ordination costs

• Potential for a clash of egos and company cultures

• Dealing with conflicting objectives, strategies, corporate values and ethical standards

• Can result in becoming too dependent on other firms for essential expertise over the long term

• Liability levels will depend on the contractual relationships for the delivery of the project

• The relationship may not be ‘win-win’, one member may benefit more than the others

• Reduce future opportunities to be able to work with your alliance partners competitors

CostImplications

Documentation should be developed between the parties to govern the relationship but this is relatively inexpensive process. There will however be ongoing costs in negotiating lead and subcontractor agreements on a project by project basis.

Approximate Fee: $1500 to $2500 to draft a Memorandum of Understanding or Business Alliance Agreement.

CO-OPerAtIveS

Description

A business cooperative is a registered organisation with a minimum of five individuals or businesses that pool their resources in order to compete with larger corporations who have larger resources, market power and budgets. All members have equal voting rights when making decisions about the operation of the cooperative.

There are two types of cooperatives – trading cooperatives which are formed to establish a business that makes a profit for its members and non trading cooperatives which is a ‘not for profit’ organisation.

Cooperatives allow members to pool resources to achieve greater benefits than they could as individuals. Cooperatives belong to, and are operated for, the benefit of members who generally share investment and operational risks, benefits and losses. Generally all members are expected to participate and share the responsibility for running the cooperative.

WhentoUse

Cooperatives should be considered if there are at least 5 organisations in a similar field who have a clear and common objective to work together to deliver service driven outcomes for its members.

03LegalOptions



Advantages

• it is generally cheaper to register a cooperative than a company

• all shareholders have an equal vote at general meetings regardless of their shareholding or involvement in the cooperative

• shareholders, directors, managers and employees have no responsibility for debts of the cooperative unless those debts are caused recklessly, negligently or fraudulently

• a cooperative is member owned and controlled, rather than controlled by investors

• all members and shareholders have to be active in the co-operative

Disadvantages

• possibility of conflict between members;

• longer decision-making process;

• there must be a minimum of five members

• there is a usually a limited distribution of surplus (profits) to members/shareholders and some cooperatives may prohibit the distribution of any surplus to members/shareholders

• as cooperatives are formed to provide a service to their members rather than a return on investment, it may be difficult to attract potential members/shareholders whose primary interest is a financial return

• even though some shareholders may have a greater involvement or investment than others, they still only get one vote

• members/shareholders have to be actively involved in the cooperative

CostImplications

Medium cost involved in the establishment. Specialist help will be required through the various stages of the cooperative process.

Approximate Fee: $1500.

UNIttrUStS

Description

A unit trust is where the unit holders, who are all predominantly un-related members of two or more separate businesses get together to run a business together. The trustee has no discretion on which unit holder gets which distribution portion of income or capital of the trust. All income and capital is distributed according to unit holding.

Trusts are created by a legal document called a trust deed which outlines the purpose of the trust, the rights and obligations of the trustees and unit holders, powers of the trustee, and identifies various parties such as initial unit holders & Trustee(s).

03LegalOptions

P 21

WhentoUse

Use when there are a number of unrelated investors coming together to pursue a common purpose. Is a good option to consider when investors are contributing different amounts of capital.

Advantages

• Cheaper and more flexible than incorporation

• Relatively easy to establish and not subject to government controls on their formation or operation (except where a company acts as a trustee)

• Some tax advantages exist (income tax and capital gains)

• Enables protection of assets

• Provides flexibility in determining the recipients of income distribution

• Liability of trustee can be limited if it is a company

• The beneficiaries may control the activities of the trust if they are also directors of the trust company

Disadvantages

• Cannot distribute capital or revenue losses to unit holders

• Must be strict adherence to the terms of the trust deed

• If the trustee is a company, there are strict financial and legal considerations under the Corporations Act 2001

• Management disputes may arise with a unit trust where it is under the control of more than one person

CostImplications

Medium level of cost associated with preparation of trust deed. Recommended that lawyers or your accountant be engaged to assist in drafting of this documentation.

Costs will be more expensive if a company is used as the trustee.

Approximate Fee: $1500 to $2500.

JOINtveNtUre(UNINCOrPOrAteD)

Description

An unincorporated joint venture is an association of investors which lacks both corporate form and equity capital. It is sometimes called a contractual joint venture which is brought into existence by a contract under the ambit of which investors undertake a joint commercial activity.

03LegalOptions



WhentoUse

Usually used when you are looking to carry out a specific business enterprise that has a defined end date or is not likely to be long term.

If the degree of risk in the new venture is high consider using an incorporated joint venture to protect the parent companies from the risk of failure.

Advantages

• Not regulated by specific statutes as are companies and partnerships

• Tax advantages, not required to file taxes as a business entity and partners can pass joint venture losses and profits directly to their person income tax return

• Allow companies to enter related businesses or new geographic markets or gain new technological knowledge relatively cheaply

• Provides access to greater resources, including specialised staff and technology

• Enables sharing of risks with a venture partner

• Joint ventures can be flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting both your commitment and the business’ exposure

Disadvantages

• Have unlimited liability for company debts and obligations. The joint venture is not a separate legal entity from the participants

• It takes time and effort to build the right relationship and partnering with another business can be challenging

• Joint venture does not give the management of the company complete control because the decisions are taken by both the companies and this can create problems if both companies do not agree on some issues

• It is difficult to integrate resources of companies entering into joint venture because both the companies have different policies, cultures and objectives

• There is potential for conflicts and disputes on how to manage the business affairs of the joint venture

• There are risks of an unincorporated joint venture being classified as a partnership which has tax and operational implications. Careful drafting of the JV agreement is required to avoid this scenario

CostImplications

Can be expensive to set up initially as the negotiation of the joint venture agreement can be time consuming. Recommended that lawyers be engaged to assist in drafting of this documentation.

Approximate Fee: $2500 to $10,000 depending on complexity and number of participants.

03LegalOptions

P 23

LIMIteDLIABILItyCOMPANy(INCOrPOrAteDJOINtveNtUre)

Description

Is a form of joint venture but creates a separate company to establish this relationship. Generally it will be established as a company limited by shares with means the liability of its members is limited to the amount unpaid on shares held by them.

A limited liability company may be incorporated as a proprietary (private) or public company.

WhentoUse

Use when you are looking to carry out a specific business enterprise that is likely to be longer term and when you want to shield the parent companies from the risk of the new venture failing.

Advantages

• Limited liability protection to shareholders

• A company has separate legal status which means third parties can generally only sue the company, not the shareholders

• Continuity is preserved and is independent of members in that a company will last forever unless liquidated by due process under the Corporations Act 2001

• A company is flexible in that its Constitution may be altered

• Shareholders usually have limited liability although directors nowadays are often asked for personal guarantees

• There is greater flexibility in introducing new members and in settling the affairs of deceased members

• Larger amounts of capital can be raised, both as debt and equity

• Small proprietary companies do not have to file annual financial statements or appoint auditors

Disadvantages

• The legal fees and registration fees for a company are such that most people do not incorporate companies until their business grows to a reasonable size

• Members have less control and need not be part of management structure

• Onerous regulatory responsibilities including keeping proper books of account

CostImplications

Set up costs will differ depending on size and complexity. If setting up a small proprietary company this can be done relatively inexpensively through ASIC. The bigger cost implications are generally related to meeting operational requirements imposed by the Corporations Act.

Approximate Fee: $500 to $1000 for registration only. Additional establishment costs will be incurred in engaging accountants and lawyers to assist in the process and could be in excess of $10,000.

03LegalOptions



03LegalOptions

Cooperatives

Unit Trust

Joint Venture

Limited Liability Company

Strategic Business Alliance

Lead Contractor

SIMPLE (2–4 WEEKS) COMPLEX (6 MONTHS+)

SetUPCOStS,LegALANDACCOUNtINgFeeS

$0 $10,000+

Joint Venture(Approx $2500

– $10000)

Strategic Business Alliance

(Approx $1500 – $2500)

Limited Liability Company

(In excess of $10,000)

Unit Trust(Approx $1500

– $2500)

Cooperatives(Approx $1500)

Lead Contractor(Approx $0

– $1000)

LeNgthOFtIMetOeStABLISh

P 25

MemorandumofUnderstanding

The usual purpose of a Memorandum of Understanding (MOU) is to provide a brief record of the terms of a transaction as agreed by the parties during a negotiation process. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used in cases where parties do not want to enter into a formal legal commitment but want to capture the essence of what the parties have agreed to.

A Memorandum of Understanding can be a useful way to document and verify the key terms of a transaction before entering into a final contract.

The following basic form of a Memorandum of Understanding (MOU) is between a Lead Partner collaborating with a Supporting Partner for the purposes of identifying, bidding and securing business opportunities to provide collaborative services to third parties.

Attached to this Appendix is a draft MOU for a Collaborative business arrangement.

ChoosingbetweenaMemorandumofUnderstandingandaContract

• Consider whether you want to enter into a binding agreement at this stage, or whether you do not wish to be contractually bound until a later stage in the negotiations.

• If you do not wish to be bound by the document until a formal contract comes into place then you should use the Memorandum of Understanding. If you wish to be bound the document, it is recommended that you enter into a contract.

• If you are unsure or concerned about any of your rights or obligations under this agreement, you should seek independent legal advice.

04AppendixA–SampleMemorandumofUnderstanding



MeMOrANDUMOFUNDerStANDINg

This non-binding Memorandum of Understanding (“MOU“) is entered into between:

[Insert name of Lead Partner] of [Insert Registered Address of Lead Partner] [Insert ABN of Lead Partner] and

[Insert name of Supporting Partner] of [Insert Registered Address of Supporting Partner] [Insert ABN of Supporting Partner] (hereinafter referred to collectively as the Parties).

WhereAS the parties have formed a business collaboration in order to perform certain complimentary services and identify opportunities to bid for and secure the provision of the these services in the area of [insert details of target markets and opportunities] to third parties on a project by project basis [amend as appropriate to reflect the true intent of the partnership] (“Services”).

WhereAS as a business partnership, the Parties have agreed to develop, deliver, operate, administer and manage the Services on the terms set out in this MOU.

NOW,thereFOre, in consideration of the mutual interests described above, the Parties agree to work together in the following manner.

1. Purpose

1.1. The Parties agree to collaborate with each other, on the principles, terms and conditions set out in this MOU, for the development and identification of opportunities to provide the Services to third parties and where opportunities are secured the parties will collaborate on the delivery, operation, administration and management of the Services to third parties (the “Project”).

1.2. The Parties agree to work together in good faith on the Project.

1.3. [insert any additional purposes as required]

2. keyPrinciplestoCollaborate

2.1. The Parties acknowledge the following statement of principles to guide their partnership under this agreement in relation to the Project.

2.1.1. Integrated service delivery will be client and outcome focussed;

2.1.2. The Parties will demonstrate, through their action, a willingness to make the partnership succeed;

2.1.3. The Parties to the agreement share a common vision, values, and understanding of the scope of their individual obligations under this MOU; and

2.1.4. The Parties will adhere to acceptable levels of privacy and confidentiality protection.

2.2. The Parties agree that in their interactions with each other they will adhere to following behaviours

2.2.1. demonstrate and maintain transparency and trust

2.2.2. demonstrate and maintain responsiveness to timelines and communications

2.2.3. create and maintain mutual value

2.2.4. proactively work to develop mutual capability

2.2.5. demonstrate and maintain a willingness to work together to deliver the Project

2.2.6. [Insert any other relevant behaviours as appropriate]


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3. termandOperation

3.1. Term of Agreement

3.1.1. The term of this MOU is for a period of [insert length of MOU, usually 1-3 years] from the effective date of this agreement and may be extended upon written mutual agreement.

3.1.2. It shall be reviewed at least [insert review period, at least annually] to ensure that it is fulfilling its purpose and make any necessary revisions.

3.1.3. Either party may terminate this MOU upon thirty (30) days written notice without penalties or liabilities.

3.2. Non-Binding Memorandum of Understanding

This Memorandum of understanding merely constitutes a statement of the mutual intention of the parties with respect to its contents. It is not a formal undertaking and implies that the signatories will strive to reach, to the best of their ability, the objectives stated in this Memorandum of Understanding.

3.3. Nature of the Relationship

3.3.1. Subject to the terms of this MOU, the implementation and pursuit of the goals, objectives, conditions and terms of this collaboration will be carried out in accordance with the policies and procedures of each party.

3.3.2. This MOU will in no way alter the terms of employment or compensation of employees of either organisation that is a party to this MOU.

3.3.3. The relationship between the parties created by this MOU is that of independent contractors. Nothing contained in this document will be construed as constituting any other relationship between the parties.

3.3.4. Each party is responsible for its own obligations arising under this agreement and neither party shall have the right power, or authority to obligate or bind the other in any manner whatsoever, except as otherwise agreed to in writing.

3.4. Liability

Each party will be responsible to the other party for the Services that it performs in respect of the Project. This reflects that each party is separately liable to persons not a party to this agreement for any actions, costs, claims, damages and charges in respect of injury, loss or damage resulting from the negligent acts or omissions of its agents and employees. Each party agrees that it will be responsible for any actions, costs, claims, damages and charges in respect of injury, loss or damage resulting from the negligent acts or omissions of its agents and employees.

4. StructureofPartnership

4.1. Management Structure

The Project will be managed using a structure made of the following features:

4.1.1. Lead Partner: [Name the Lead Partner]

4.1.2. Supporting Partner: [Name the Supporting Partner]




4.2. Management

Each party shall designate a senior partner, director or other senior representative to be responsible for the overall administration of the Agreement (a “Responsible Officer”).

4.2.1. For the Lead Partner: [insert name, title and contact details of responsible officer]

4.2.2. For the Supporting Partner: [insert name, title and contact details of the responsible officer]

4.3. Roles of Partnership Members

Within the management structure outlined in clause 4.2 the parties will play different roles in the Project as follows:

4.3.1. Role of the Lead Partner

[insert details of the roles and responsibilities of the Lead Partner in relation to the Project, this may include bid management, project management, organising and chairing meetings, report writing, client management, managing the finances and invoicing, providing resources and equipment where necessary, making applications for government funding, removing obstacles to the project’s success etc]

4.3.2. Role of the Supporting Partner

[insert details of the roles and responsibilities of the Supporting Partner in relation to the Project, this may include attending meetings, project administration, writing bid proposals, researching opportunities for collaboration, etc]


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4.3.3. Joint Responsibilities

[insert details of any joint responsibilities of the parties, this may include preparing agreed deliverables, meeting project milestones and deadlines, providing a responsible officer to manage the administration of the project, etc]

5. OpportunityIdentificationandBiddingProcess

5.1.1. The parties will jointly pursue opportunities to provide the Services together.

5.1.2. If either of the parties wishes to prepare a submission or tender in relation to the provision of the Services, the parties will first consult with each other, prior to a submission or tender to confirm whether the parties will or will not jointly pursue the opportunity and obtain sign off from the respective Responsible Officers.

5.1.3. If either party elects not to participate in the preparation of a joint submission or tender after preliminary joint analysis of the opportunity, either party may continue to finalise a submission or tender, and perform the work to which it relates, either on its own or in association with third parties.

5.1.4. In the spirit of the MOU and the development of a mutually beneficial relationship it is intended that the parties should openly communicate reasons in deciding not to partner on particular opportunities. This will enable a better understanding of each organisations perspective, on a best for business opportunity basis, and will enable each business to proactively strength each other’s support to the relationship for future opportunities.

6. FinancialArrangements

6.1. Payments for Services

6.1.1. Either party may at their election, invoice the client directly for the Services they have provided in relation to the Project.

6.1.2. The Lead Agency may also, at its election, invoice the client directly for all services related to the Project, including services provided by the Supporting Partner to the client. In that event the Supporting Partner shall invoice the Lead Partner for their proportion of the invoiced services provided to the client which shall be paid by the Lead Agency within 7 days of receipt of invoice.




6.2. Payments to Third Parties

The parties may make payments to a third party for services rendered or goods supplied in relation to the Project in the ordinary and usual course of business as contemplated by this Agreement.

6.3. Expenses

A party may not commit the other to any cost, expense or obligation without the written consent of that party.

6.4. No Profit Sharing

Nothing in the agreement shall be construed as providing for the sharing of profits or losses arising out of the efforts of any other party.

7. Confidentiality

7.1. The parties agree that in the course of the performance of the Services associated with the Project, that each may be given access to, or come into possession of, confidential information of the other party which information may contain trade secrets, proprietary data, or other confidential material of that party.

7.2. Therefore the parties agree to execute a binding Non Disclosure Agreement to govern the manner in which the parties may exchange, utilise and disclose where necessary any confidential information associated with the Project.

8. IntellectualProperty

8.1. Joint Intellectual Property

Where Services has been performed jointly by the Lead and Supporting Partner pursuant to the Project, any intellectual property developed as a result including but not limited to information, materials, products and deliverables, will be jointly owned by the parties.

8.2. Intellectual Property of the Parties

8.2.1. Where Services has been performed individually by the Lead Partner and the Supporting Partner pursuant to the Project, any intellectual property developed as a result including but not limited to information, materials, products and deliverables, shall be the property of the respective parties performing the work.

8.2.2. All underlying methodology utilised by the Lead Partner and Supporting Partner respectively which was created and/or developed by either before the date of this Agreement and utilised in the course of performing engagements pursuant to this Agreement shall not become the property of the other.

8.3. Trademarks, Trade Names and Copyrights

Except as otherwise expressly provided herein, this MOU does not give either party any ownership rights or interest in the other parties trade name, trademarks or copyrights.

9. Disputeresolution

9.1. Dispute

Where a disagreement or dispute arises out of or in connection with this MOU, the aggrieved party may give written notice of the dispute to the other party.


P 31

9.2. Attempt to Settle Dispute

9.2.1. In the event that an aggrieved party gives notice of a dispute to the other party under clause 8.1, the Parties must use their best endeavours to resolve the dispute in good faith through negotiation.

9.2.2. Where the Parties are unable to settle a dispute within 7 days of the aggrieved party giving notice to the other that a dispute exists, the parties must make representatives with authority to settle the dispute available for the purpose of meeting in an effort to resolve the dispute. At least one meeting of the authorised representatives must take place within 21 business days of service of the referral of the dispute to them.

9.3. Mediation

If the dispute is not resolved in accordance with clause 8.2 above, the parties may refer to dispute to mediation under the mediation rules of the Law Society of South Australia [amend jurisdiction as appropriate] to:

9.3.1. a mediator agreed by the Parties; or

9.3.2. if the Parties are unable to agree a mediator within 10 business days, a mediator nominated by the President of the Law Society or the President’s nominee.

9.4. Cost of Mediation

Each party must bear its own mediation costs. The parties must bear equally the costs of any mediator.

9.5. Termination of Mediation

The mediation process within terminate within 30 days of the appointment of the mediator, upon which any Party will be entitled to commence court proceedings in relation to this dispute.

10. generalProvisions

10.1. Assignment

Neither party will assign or otherwise transfer its rights or delegate its obligations under this Agreement without both parties prior written consent. Any attempted assignment, transfer or delegation without such consent is void.

10.2. Variation

This agreement can be modified or amended only in writing signed by all parties.

10.3. Conflict of Interest

Each party warrants that no conflict of interest exists or is anticipated relevant to its role in this agreement or the Project. If a conflict of interest arises, the party affected will notify the other party immediately and the parties will seek to resolve the conflict to ensure the successful performance of the Project is not jeopardised.

10.4. Insurance

Where required by law, the parties will maintain insurance policies with respect to performance of their obligations under this MOU.

10.5. Governing Law

The laws in force in the State of South Australia shall apply to the Agreement and the Parties shall submit to the jurisdiction of the courts of South Australia.




10.6. Assignment and Delegation

Neither party shall assign or delegate this MOU or any rights, duties, or obligations hereunder to any other person and/or entity without prior express written approval of the other party.

10.7. Notices

Any notice required or permitted to be given under this MOU shall be in writing, by hand delivery, commercial overnight courier, or registered or certified mail, to the address stated below for Small or to the address stated below for Large, and shall be deemed duly given upon receipt, or if by registered or certified mail three (3) business days following deposit in the mail. The parties hereto may from time to time designate in writing other addresses expressly for the purpose of receipt of notice hereunder.

10.7.1. If to Lead Partner: [Insert address]

10.7.2. if to Supporting Partner: [Insert address]

10.8. Publicity

A party may make press or other announcements or releases relating to this MOU or the Project without the approval of the other party as to the form and manner of the announcement or release, except and to the extent that the announcement or release is required to be made by the party by law.

10.9. Entire Agreement

This MOU constitutes the entire agreement of the Parties about its subject matter and supersedes all previous agreements, understandings and negotiations on that subject matter.

exeCUteDasaMemorandumofUnderstanding

DAteD this day of 201X

SIGNED for and on behalf of SIGNED for and on behalf of [Insert Lead Partner] [Insert Supporting Partner]

By: By:


P 33

NONDISCLOSUreAgreeMeNtteMPLAte

THIS AGREEMENT is made the day of

BETWEEN [Insert Lead Partner Name] of [Insert Registered Address] [Insert ABN] (“Lead Partner”)

AND [Insert Supporting Partner Name] of [Insert Registered Address] [Insert ABN] (“Supporting Partner”)

reCItALS:

A. The Lead Partner and Supporting Partner have an interest in forming a business collaboration wherein one party (“the Disclosing Party”) might share information with the other party (“the Receiving Party”) that the Disclosing Party considers to be proprietary and confidential (“Confidential Information”) for the purposes of undertaking activities related to such business collaboration.

B. The Parties agree that in consideration of the Disclosing Party disclosing Confidential Information to the Receiving Party, the Receiving Party agrees to keep the Confidential Information of the Disclosing Party confidential, and to only use and disclose that Confidential Information pursuant to the terms of this Agreement.

OPerAtIvePArt

1. generalMatters

1.1. Definitions

In this Agreement including the Recitals unless the Contrary Intention appears:

1.1.1. “ConfidentialInformation” means any means any information provided to the Receiving Party from the Disclosing Party, in any Form or Storage medium (and includes information disclosed orally) which is:

(a) is by its nature confidential;

(b) is designated by the Disclosing Party as confidential; or

(c) the Receiving Party knows or ought to know is confidential;

but does not include information which:

(d) was known to the Receiving Party as at the date of this Agreement otherwise than as a result of disclosure by the Disclosing Party;

(e) was in or becomes part of the public domain otherwise than as a result of a breach by the Receiving Party of its obligations under this Agreement;

(f) is disclosed to the Receiving Party by any third party which does not owe any obligation to the Disclosing Party (directly or indirectly); or

(g) is required by law to be disclosed by the Receiving Party provided that the Receiving Party will immediately notify the Disclosing Party of any such requirement – if possible before making the disclosure.

(h) The onus of proof of the matters referred to in clauses (d) – (g) inclusive is on the Receiving Party.

05AppendixB–SampleNon-DisclosureAgreement



1.1.2. “CorporationsAct” means the Corporations Act 2001 (Cth).

1.1.3. “DisclosingParty” means the party that discloses or provides Confidential Information to the other party and in the case of this Agreement may be either party.

1.1.4. “Form” in relation to Confidential Information means the way in which Confidential Information is written or stored, including whether it is visible or invisible, machine, electronically or digitally encoded, embodied or otherwise.

1.1.5. “Parties” means [Insert Lead Partner Name] and [Insert Supporting Partner Name] and Party means either of the Parties

1.1.6. “receivingParty” means the party that receives Confidential Information from the Disclosing Party or any Related Entity of the Disclosing Party and in the case of this Agreement may be either party.

1.1.7. “relatedentity” has the same meaning that it has in the Corporation’s Act.

1.1.8. “representative” in relation to the Receiving Party includes employees, agents, contractors (including subcontractors), consultants, officers, directors, partners or joint venturers of the Receiving Party or a Related Entity of that party.

1.1.9. “StorageMedium” means in relation to Confidential Information, any method of storing or holding the Confidential Information and from which the Confidential Information can be observed, read, deciphered or reproduced.

1.1.10. “SpecifiedPurpose” means the purpose for which the Confidential Information was provided to the Receiving Party.

1.2. Construction of Terms

In this Agreement including the Recitals unless the contrary intention appears:

1.2.1. the clause headings are for convenient reference only and have no effect in limiting or extending the language of the provisions to which they refer;

1.2.2. words in the singular number include the plural and vice versa;

1.2.3. a reference to a person includes an individual, partnership and a body whether corporate or otherwise;

1.2.4. where a word or phrase is given a particular meaning, other parts of speech and grammatical forms of that word or phrase have corresponding meanings;

1.2.5. a reference to any document (including this Agreement) includes a reference to that document as amended, rectified or replaced from time to time and to any document so amending, rectifying or replacing the document;

1.2.6. a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;

1.2.7. where a term is assigned to a particular meaning, other grammatical forms of that term have a corresponding meaning;

1.2.8. a reference to a person in a document includes that person, its legal representatives, successors and permitted assigns;

1.2.9. an agreement, representation or warranty in favour of two or more persons (including the Receiving Party) is for the benefit of them jointly and each of them individually;


P 35

1.2.10. an agreement, representation or warranty by two or more persons (including the Receiving Party) binds them jointly and each of them individually;

1.2.11. the meaning of general words is not limited by specific examples introduced by including, for example and similar expressions.

1.3. Interpretation

1.3.1. No Waiver

None of the provision hereof shall be taken either at law or in equity to have been varied waived discharged or released by either party unless by its express consent in writing. No waiver by either Party of one breach of any provision of this Agreement shall operate as a waiver of any breach, or of any other provision of this Agreement.

1.3.2. Cumulative Remedies

The rights and remedies provided under this Agreement are cumulative and not exclusive of any rights or remedies provided by law and are in addition to and not in derogation of any other right or obligation under any other deed or agreement between the parties.

1.3.3. Governing Law

(a) The law of the State of South Australia governs this Agreement and any legal proceedings or arbitration under this Agreement. Any legal action in relation to this Agreement against any Party may be brought in any court of competent jurisdiction in the State of South Australia.

(b) Each Party by execution of this Agreement irrevocably, generally and unconditionally submits to the non exclusive jurisdiction of any court specified in this provision in relation to both itself and its property.

1.3.4. No exclusion of laws

This Agreement shall not be construed to exclude the operation of any principle of law or equity intended to protect and preserve the confidentiality of the Confidential Information.

1.3.5. Contract Interpretation

No rule of contract interpretation will be applied in the interpretation of this Agreement to the disadvantage of one Party on the basis that it prepared or put forward any document comprising part of this Agreement.

1.3.6. Severability

If any part of this Agreement is or becomes illegal, invalid or unenforceable in a relevant jurisdiction, the legality, validity or enforceability of the remainder of this Agreement will not be affected and this Agreement will be read as if that part had been deleted.

1.3.7. entireAgreement

This Agreement constitutes the whole understanding between the Parties, and embodies all terms and conditions of the transaction.

2. UseandDealingwithConfidentialInformation

2.1. The Receiving Party

2.1.1. must keep confidential all Confidential Information;

2.1.2. may use the Confidential Information solely and exclusively for the Specified Purpose




2.1.3. will not cause, allow, suffer or permit the Confidential Information to be disclosed by the Receiving Party or any Representative of the Receiving Party, to any person including any Related Entity except as provided by clause 2.2

2.1.4. must not copy to, store or save the Confidential Information on any computer, database or other electronic means of data or information storage or exchange (“Computer System”), unless such Computer System is controlled solely and exclusively by the Receiving Party.

2.2. A Receiving Party may only disclose Confidential Information:

2.2.1. to an employee of the Receiving Party and only then if that employee requires to know that information for the Specified Purpose

2.2.2. where it is required by statute, rule, regulation, judicial process or in connection to any litigation to which it is a party in connection with this Agreement, provided that before such disclosure the Receiving Party notifies the Disclosing Party in writing,

2.2.3. to a Representative (not being a direct employee) of the Receiving Party, and only if before such disclosure the Receiving Party has:

(a) received written consent from the Disclosing Party to do so; and

(b) obtain a written undertaking (“Undertaking”) from that Representative to maintain and respect the confidentiality of the Confidential Information on the same terms as required by this Agreement as if the Representative were a Receiving Party under this Agreement.

2.3. The Receiving Party must, to the best of its ability

2.3.1. ensure that each employee to whom it discloses Confidential Information pursuant to clause (2.2.1) maintains and respects the confidentiality of the Confidential Information on the same terms as required by this Agreement as if the employee were a Receiving Party under this Agreement;

2.3.2. ensure that each person to whom it discloses Confidential Information pursuant to clause 2.2.3 complies with its Undertaking; and

2.3.3. take all steps to prevent or stop a suspected or actual breach of an Undertaking

2.4. The Provisions of clauses 2.1 to 2.4 inclusive survive the expiration or termination of this Agreement until all of the Confidential Information comes into the public domain otherwise than by disclosure in breach of this Agreement or a similar agreement between the parties.


P 37

3. BreachofConfidentiality

3.1. The Receiving Party agrees to indemnify and keep the Disclosing Party fully indemnified against all damage, loss and expenses arising from or in relation to any obligation contained in this Agreement.

3.2. The Receiving Party acknowledges that damages may not be an adequate remedy for a breach of the provisions of this Agreement and that the Disclosing Party shall be entitled to injunctive or other equitable relief for any threatened or actual breach of the Receiving Parties obligations under this Agreement.

4. NorepresentationsOrWarranties

4.1. The Receiving Party acknowledges and agrees that the Disclosing Party:

4.1.1. has not made or makes any representation, warranty or undertaking of any kind in respect of the accuracy, completeness, veracity, content or otherwise in relation to the Confidential Information; or

4.1.2. is not under any obligation to the Receiving Party to notify it, or provide any further information if the Disclosing Party becomes aware of any of the matters referred to in clause 4.1.1 or any change in circumstances or information that may affect such matters.

4.2. The Receiving Party acknowledges and agrees that it must make its own assessment of all information disclosed by the Disclosing Party and must satisfy itself of the accuracy, completeness, veracity, content or otherwise in relation to the Confidential Information.

5. returnofConfidentialInformation

5.1. The Receiving Party shall within 7 business days return and redeliver to the Disclosing Party all Confidential Information provided pursuant to this Agreement, in whatever form of storage or retrieval which is in the possession, custody or control of the Receiving Party upon the earlier of:

5.1.1. The completion of termination of dealings between the parties as contemplated by this Agreement;

5.1.2. The termination of this Agreement; or

5.1.3. At such time as the Disclosing Party may request provided however that the Receiving Party may retain such of its documents as are necessary to enable it to comply with its document retention policies.

5.2. Alternatively the Receiving Party may with the written consent of the Disclosing Party immediately destroy the Confidential Information and upon request certify in writing such destruction to the Disclosing Party.

6. term

6.1. This Agreement shall remain in effect for a two year term from the date of execution. Notwithstanding the foregoing the Receiving Parties duty to hold in confidence Confidential Information disclosed during the term shall remain in effect indefinitely.




exeCUteDasanAgreement

DateofAgreement:

SIGNED for and on behalf of [Insert Lead Partner] by its duly authorised representative in the presence of:

Signature

Print name

Witness

SIGNED for and on behalf of [Insert Supporting Partner] by its duly authorised representative in the presence of:

Signature

Print name

Witness


P 39

06Notes

DISCLAIMERThe Government of South Australia gives no warranty and makes no representation, whether express or implied, as to the accuracy of information contained within this publication or the suitability of the information for any purpose. Any use of the information contained in this publication (whether authorised or not) is at the users’ sole risk and the Government of South Australia disclaims responsibility for any loss or damage incurred as a result of such use. The information is provided solely on the basis that users of the information will make their own assessment of the accuracy of the information and users are advised to verify all information contained within this document.

Content correct at time of printing.

COPYRIGHTProduced by the South Australian Department for Manufacturing, Innovation, Trade, Resources and Energy © November 2012

Department for Manufacturing, Innovation, Trade, Resources and Energy

Level 9, The Conservatory 131–139 Grenfell Street, Adelaide SA 5000

GPO Box 1264, Adelaide SA 5001

T +61 8 8303 2400 F +61 8 8303 2509

E [email protected] www.dmitre.sa.gov.au/sbs

Documents

A Guide to Business Collaborative Contracting