Are collaboration agreements contractual?
Primary care expert, Justin Cumberlege, considers whether entering into collaboration agreements may result in a legal liability for your practice.
As integrating health and care becomes more pressing so collaboration with other organisations is becoming a reality. Schedule 7 of the PCN network agreement suggests that you should set out rules for collaborating with others. In practice, this means that you would have to enter into an agreement with them.
Are collaboration agreements legally binding?
Some collaboration agreements are not legally binding, but that is not necessarily the case, even if they state that they are not contractual. If consideration passes between the parties (that is each party gives something, such as payment by one party in return for services by the other) then a contract has been formed.
If you fail to perform your part of the contract, then a claim will follow. The fact that you have entered into a collaboration agreement in which you state that it is not contractual, does not mean that it isn’t contractual. A contract does not have to be written, it can be spoken, or it may be formed through a chain of emails, or simply by custom and practice.
This is a trap which should be avoided. You should always think very carefully about why you are collaborating with somebody, and what the roles and responsibilities of each of the parties are. What will your obligations and liabilities be? Possibly if the parties are acting independently with a common goal, but without reliance on each other, it will be non-contractual.
Advice on collaboration agreements
Before entering into any collaboration agreement always think about the function first before deciding whether it is going to be a non-contractual agreement, or a contractual agreement that is legally binding in which each party is required to carry out certain obligations.
If you are contracting with statutory organisations, make sure that the people you are talking to are able to ‘bind’ the statutory organisation. Do not leave it to the point of signing to find out that the person you have made the agreement with doesn’t have the authority to bind the organisation.
Do your due diligence about the other party to ensure that they have the capability and resources to carry out their side of the collaboration agreement.
Then consider the detail. Who is employing the staff, and then where are they going to work and who is going to be supervising them? Setting this out and the costs to be paid by each of the parties, including who may have to enter into the contract with the commissioner for the service to be provided by the collaboration, needs to be agreed.
The person who enters into that contract with the commissioner is going to be liable, whether or not they have an expectation that their collaborators will fulfil parts of the obligation. If you are going to be the head contractor and you are relying on others to deliver the contract, then you will need to have a sub-contract with the other collaborators.
A possible alternative is to set up an independent company (often referred to as a Special Purpose Vehicle (SPV)) where each of the parties are shareholders, and the company becomes the head contractor. You will still need to decide on what terms the SPV will operate and who the directors are and what the purpose of the SPV is.
First published in GP Business in June 2024.