Drafting Simple Intercompany Agreements

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

Creating intercompany agreements is essential for maintaining the smooth functioning of operations between two businesses. They provide a legal framework that outlines the agreed terms and conditions of the relationship, clearly laying out each party’s rights and responsibilities, their liabilities in case of dispute and any financial safeguards that need to be put in place.

This agreement needs to be taken seriously and drafted carefully, as it can potentially protect both parties from misunderstandings or costly litigation. It can also help ensure that all bases are covered when dealing with long-term business relationships such as joint ventures, so every party can feel secure.

To help businesses simplify this process, Genie AI provides free intercompany agreement templates crafted by its community. The library uses millions of data points to create market-standard documents so you can easily customize high quality agreements without having to pay for a lawyer. Plus, with our step-by-step guidance, you don’t even need a Genie AI account to access it - we just want to help!
So if you’re looking for assistance with drafting an effective intercompany agreement, read on below for more information and find out how to access our template library today.

Definitions (feel free to skip)

Parties: People or groups involved in an agreement.
Scope: The area or range of activities or people covered by an agreement.
Purpose: The goal or reason for an agreement.
Drafting: Writing out the details of an agreement.
Negotiating: Discussing and coming to a mutual agreement.
Executing: Formally signing or enacting an agreement.
Revising: Making changes to an agreement.
Legal advice: Expert advice from a lawyer or legal advisor.
Dispute resolution: Procedures for settling disagreements.
Signatures: Authorized signatures that signify agreement.
Filing: Registering an agreement with the relevant authorities.

Contents

• Identifying the parties
• Defining the scope of the agreement
• Identifying the purpose
• Drafting the agreement
• Negotiating and executing the agreement
• Reviewing and revising the agreement
• Obtaining legal advice
• Establishing dispute resolution procedures
• Obtaining signatures
• Filing the agreement

Get started

Identifying the parties

• Understand the purpose of the intercompany agreement and identify all parties involved
• Research the organizational structure of each company to make sure you have the right contact information
• Obtain the name and contact information of the legal representatives of each party
• Confirm that each party has the authority to enter into the agreement
• When you have all the necessary information, you can move on to the next step.

Defining the scope of the agreement

• Understand the purpose of the agreement and the business needs of each party
• Clarify which services or products are to be exchanged between the parties
• Define the term of the agreement, including any termination provisions
• Identify any licenses, permissions, or other forms of consent that may be required for the agreement
• Establish any reporting or other obligations each party may have
• Determine any other related agreements or documents that may be necessary for the agreement

You can check this off your list when you have a full understanding of the scope of the agreement, including all of the items listed above.

Identifying the purpose

• Consider the purpose of the agreement, what the parties are trying to accomplish, and what their mutual goals are
• Brainstorm different ways that the agreement can help both parties reach their objectives
• Research and review relevant regulations, laws, and industry standards to ensure the agreement is compliant
• Discuss with the parties involved to determine what they hope to gain and what they’re willing to negotiate

Once you have identified the purpose of the agreement, have researched and discussed the objectives and objectives of the parties, and have reviewed any relevant regulations, laws, and industry standards, then you can move on to the next step which is drafting the agreement.

Drafting the agreement

• Research applicable laws, regulations, and company policies that may be relevant to the agreement
• Draft the agreement based on the purpose identified in the previous step
• Clarify any ambiguities or omissions in the agreement
• Review the agreement with the relevant stakeholders to ensure everyone is in agreement
• Once a consensus is reached, check off this step and move on to the next step of negotiating and executing the agreement.

Negotiating and executing the agreement

• Review the draft agreement and compare it to the terms agreed upon in the contract.
• Meet with the other party and agree on the final terms of the agreement.
• Sign the agreement and exchange copies of the signed document with the other party.
• Ensure that the agreement has been properly executed and that all legal requirements have been met.
• Record the agreement in the proper place, such as your records or the other party’s records.

Once you have exchanged the signed agreements, you can check off this step and move on to the next step of reviewing and revising the agreement.

Reviewing and revising the agreement

• Carefully review the agreement for accuracy and clarity
• Confirm that all necessary parties have signed the document
• Make sure all terms are properly addressed, such as confidentiality and dispute resolution
• Remove any outdated or irrelevant terms
• Check for any legal or regulatory issues that need to be addressed
• Update the agreement with any changes that were made during negotiation
• Have the agreement reviewed by legal counsel

Once all of the above steps have been taken, the agreement should be ready for final execution.

Obtaining legal advice

• Contact a qualified legal advisor to review the agreement
• Ask the legal advisor to provide feedback on the agreement, including any potential issues or risks
• Use the feedback from the legal advisor to revise the agreement and address any issues
• Revise the agreement according to the legal advisor’s instructions
• When the agreement is finalized and the legal advisor is satisfied, you can move on to the next step of establishing dispute resolution procedures.

Establishing dispute resolution procedures

• Identify the types of disputes that might arise and the process that will be followed to resolve them
• Draft the dispute resolution procedures and include provisions such as the method of notice, the venue for the dispute, the timeline for resolution, and the method of dispute resolution
• Ensure that the dispute resolution procedures are consistent with the relevant laws and regulations
• When complete, you can check this off your list and move on to obtaining signatures.

Obtaining signatures

• Gather all necessary signatures from the parties involved.
• Have each signatory sign in the presence of a witness.
• Have the witness sign and date the agreement as well.
• Make sure to obtain original copies of the agreement with the signatures for each party.
• Once all signatures are obtained, the agreement can be considered complete and filed.

Filing the agreement

• Prepare the signed agreement for filing
• File the agreement with the relevant regulatory body
• Ensure the filing is accepted
• Receive confirmation of the filing from the regulatory body
• When the filing is accepted, you can check this off your list and move on to the next step.

FAQ:

Q: What differences should I be aware of when preparing an intercompany agreement between the UK and USA?

Asked by David on August 21, 2022.
A: When preparing an intercompany agreement between the UK and USA, there are several important differences that you should be aware of. For example, UK law does not recognize the concept of ‘good faith’, which is often included in US agreements. UK agreements also have different rules around confidentiality, liability, indemnification and dispute resolution than US agreements. Additionally, the US has specific rules and regulations around taxation, employment and intellectual property that do not apply in the UK. It is important to be familiar with these differences when drafting a simple intercompany agreement between the two countries.

Q: Do all intercompany agreements require a contract?

Asked by Sarah on December 5, 2022.
A: Generally speaking, yes. All intercompany agreements should be in writing and signed by both parties in order to be legally binding and enforceable. In some cases, certain elements of an agreement may not need to be in writing or signed but it’s always best practice to have a contract outlining all of the terms of the agreement in order to avoid any misunderstandings or disputes down the line.

Q: What considerations should I make when drafting an intercompany agreement for a technology company?

Asked by Michael on March 14, 2022.
A: When drafting an intercompany agreement for a technology company there are several important points to consider. Firstly, you will need to have provisions outlining how intellectual property rights are handled - who owns what and who has the right to use what. You will also need to include terms related to ownership of data and customer information as well as any restrictions on how this data can be used. Additionally, you will need to include provisions related to liability and indemnification as well as dispute resolution processes.

Q: How do EU regulations affect intercompany agreements?

Asked by Jennifer on June 3, 2022.
A: The EU has a number of regulations that can affect intercompany agreements, particularly those involving companies based in different EU countries. For example, the GDPR (General Data Protection Regulation) regulates how companies process personal data from individuals within the EU and may affect how companies share customer information with each other under an intercompany agreement. Additionally, the EU has regulations related to antitrust law which may affect certain terms within an agreement such as pricing or exclusive rights for certain products or services. It is important to ensure that any intercompany agreement between two EU based companies complies with all relevant regulations.

Q: What are the key elements of a simple intercompany agreement?

Asked by Matthew on July 17, 2022.
A: A simple intercompany agreement should include a number of key elements such as a description of the parties involved, definitions of key terms used throughout the agreement and details outlining the purpose of the agreement and what is expected from each party. Additionally, it should include provisions related to ownership of any intellectual property created during performance of the agreement, confidentiality obligations, liability and indemnification clauses as well as dispute resolution procedures. Depending on the type of agreement being drafted there may be other elements required such as payment terms or restrictions on how customer data can be used but these will depend on the specific situation.

Example dispute

Suing a Company Based on an Intercompany Agreement

• A plaintiff may sue a company based on an intercompany agreement if the company has breached the agreement.
• The plaintiff must prove that the company was in breach of the agreement, either by failing to fulfill the obligations outlined in the agreement, or by engaging in behavior that was prohibited by the agreement.
• The plaintiff may be entitled to recover damages for losses suffered as a result of the breach, which may include costs incurred, lost profits, or other forms of compensation.
• The plaintiff must also prove that the damages were directly caused by the breach of the agreement.
• The plaintiff may also be entitled to receive punitive damages, depending on the severity of the breach and the circumstances surrounding it.
• Settlement may be reached through negotiation or mediation, or the parties may proceed to trial. If the case goes to trial, a judge or jury will decide the outcome and the amount of damages, if any, that the plaintiff is entitled to receive.

Templates available (free to use)

Intercompany Administrative Services Contract
Intercompany Copyright License Contract
Intercompany Intellectual Property License Contract
Intercompany Loan Agreement
Intercompany Note
Intercompany Patent License Contract
Intercompany Revolving Loan Agreement
Intercompany Services Agreement
Intercompany Services Agreement Supplier And Recipient In Same Group
Intercompany Subordination Agreement
Intercompany Trademark License Contract
Memorandum Structuring Intercompany Debt Us Tax Considerations

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