When choosing a business partner, whether you are forming a joint venture company or licensing a third party to manufacture, use and/or distribute the licensed products, you should only proceed when you and your legal advisers are satisfied that the credentials of any business partner are first class.


If there are any doubts about the success and track record of a potential business partner, you should err on the side of caution and look elsewhere.






When a potential business partner has been identified and there is an accord between the parties to proceed further, it is most advantageous to draw up a ‘letter of intent’ that sets out in broad terms the business arrangements that are to be agreed between the parties.


The ‘letter of intent’ should be signed by both, or all of the, parties, who shall have an interest in the business relationship that is being proposed.


In the absence of any other documents relating to a business partnership, should the partnership become untenable and end up in Court, the ‘letter of intent’ may be referred to by the Court in order to resolve any issues.


Obviously, going to Court should be a last resort and other forums are available for mediation and arbitration on any vexatious issues.







The ‘letter of intent’ may be accompanied by a list of the ‘Heads of Agreement’, which includes, inter alia, the following:


a) parties to the agreement;
b) preamble/background;
c) definitions;
d) duties of licensor/licensee;
e) IPRs;
f) Confidentiality;
g) Territory;
h) Fees & Royalties;
i) Records & Accounts;
j) Arbitration;
k) Termination; and,
l) Applicable law.







After the ‘letter of intent’ is executed and the ‘heads of agreement’ are accepted as a basis for the intended business arrangement between the parties, formal copies of an Agreement should be drawn up in duplicate, or further copies thereof depending upon whether there are more partners to the Agreement.


The Agreement may include Exhibits annexed thereto, for example, a copy of any Licence that is executed by the Licensor in favour of the Licensee(s).







While negotiations are progressing in relation to the setting up of a business arrangement and before a formal conclusion of the negotiations, it is prudent to enter into an equitable Non-Disclosure Agreement (NDA) between the Parties in order to prevent any unpleasantness should the negotiations falter or break down and lead to the disclosure of secret information including the mere fact that the parties were in discussions relating to a business arrangement between themselves. 


Copies of NDAs are available from many sources upon payment; however, the UK-IPO, viz. the Patent Office, includes an NDA on their web site at: .



*John Grant is Senior Patent Attorney at Trevor Baylis Brands (TBB) plc. TBB has provided advice to thousands of individuals and companies on the best way to develop their business and protect their intellectual property. Building Enterprise (BE) Ltd is a new development from TBB  offering a one-stop shop for innovation development,  helping to take initial ideas through to a successful commercial outcome.*




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