B2B contract – Q&A
In recent years, cooperation on the basis of a B2B contract has become increasingly popular in Poland. Below you can find answers to a number of questions about the basics of this cooperation model.
The consortium agreement is nowhere explicitly regulated by law in Poland. However, in practice (especially in the construction industry) it is extremely popular. This is because it allows the implementation of large contracts, which without the help of other entities (consortium members) we simply would not be able to perform (for financial, personnel, technological, time or other reasons).
Consortium agreement – what are its characteristics?
A consortium agreement is a special type of cooperation agreement between at least 2 different entities. The characteristic of a consortium agreement is that consortium members (so the companies that participate in the consortium) enter into cooperation only for a specific project (e.g. a specific investment). The consortium members still remain separate business entities, and the consortium agreement does not create any relationship similar to that of a company.
Basically – at the happy end of the project under which the consortium was created, the consortium agreement is dissolved, and the consortium members split up and continue to operate completely independently of each other.
The consortium agreement is most often concluded at the beginning of the project (in order to be able to start executing it at all). However, there is no obstacle to concluding the consortium agreement during the execution of the main contract (this is often the case, for example, when the contractor wishes to release the cash deposit thanks to the use of security in the form of a bank/insurance guarantee “contributed” to the consortium by another consortium member).
In the case of concluding a consortium agreement already during the execution of the main contract, it is necessary to change the main contract in terms of the person of the contractor (the existing contractor gives way to several contractors acting as a consortium). Such a change, in principle, cannot be carried out without the consent of the contracting authority (client). For this reason, a consortium agreement concluded during the execution of the main contract is often limited by a condition (i.e. that it will enter into force on condition that the contracting authority – the client – agrees to replace the contractor with a consortium).
Consortium agreement – who are the consortium members and the consortium itself?
Consortium members are practically always entrepreneurs (companies or sole proprietors). Importantly – by concluding a consortium agreement, no separate and additional legal entity is created, acting alongside the consortium members themselves. Thus, the consortium members do not become a “company”, the consortium does not have legal personality or separate assets. The consortium thus remains a mere contract.
Most often, one of the consortium members (the leader) acts as the representative of the entire consortium to the client, and it is with him that the client makes arrangements, conducts negotiations, will accept invoices from him and make payments on his account.
The other members of the consortium (partners) support the action of the leader and perform the part of the main contract assigned to them in the consortium agreement.
Consortium agreement – why is it worth signing?
A consortium agreement is entered into when we are willing to perform a certain project/order, and we are not able to perform it on our own. At the same time – the reasons why we are not able to perform it on our own can be very different. Among the most common are:
It is in such cases, with the help of a consortium agreement, that we can take advantage of the experience, personnel, or financial credibility or resources of a partner (consortium member). And thanks to this (together with the partner) execute the contract.
Consortium agreement – what should be included in it?
There is no provision that dictates that the consortium agreement must contain specific provisions. In addition to the obvious elements (such as the identification of the parties, identification of the project covered by the consortium, or the law and court of jurisdiction in the event of a dispute between consortium members), it is important to clearly and unambiguously indicate in the consortium agreement:
In the consortium agreements that we prepare at MILEWSKA Legal, we also always add a provision specifying the extent to which each consortium member is liable, for example, for damages or for non-performance or improper performance of the contract, if it will not be possible to attribute this liability to a specific one of them.
Of course, consortium members can introduce a number of other provisions into the consortium agreement. It is important that the agreement clearly defines the rights and obligations of individual consortium members.
In recent years, cooperation on the basis of a B2B contract has become increasingly popular in Poland. Below you can find answers to a number of questions about the basics of this cooperation model.
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