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Royalty Contract

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Prepared for:
[Grantee's Name]

Prepared by:
[Grantor's Name]

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Royalty Contract

This Royalty Contract (hereinafter referred to as "Contract") is made effective on [Date]

By and Between

[Grantor's Name] (hereinafter referred to as "Grantor") residing at [Grantor's Address], and,

[Grantee's Name] (hereinafter referred to as the “Grantee”), residing at [Grantee's Address].

The Grantor and the Grantee are collectively referred to as “Parties” and individually as "Party". 

WHEREAS the Grantor owns and has the rights to grant any interest in its intellectual property (copyrights, patents, and other intellectual properties) (hereinafter referred to as the "Property"), 

AND WHEREAS the Grantee desires to use the Grantor's Property as per the terms and conditions as laid down in this Contract. 
 
NOW, THEREFORE, in consideration of the covenants expressed herein, both the parties agree with the below-mentioned terms and conditions.

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Terms and Conditions

1. Rights of Granting

The Grantor hereby grants the Grantee all the rights and licenses as per the law of the [State] and the territories to use the property for a period of [number of years] years.

2. Grantor's Representation and Warranties

The Grantor represents and warrants that they own the property and have all the rights to grant permission to use the property for which the Grantor exercise the options hereunder, and have the rights to enter into a contract.
By signing this contract, the Grantor shall provide all the relevant documents to the Grantee that is necessary for the utilization of property. 
The Grantor shall indemnify and hold the Grantee harmless for any and all losses, claims, and damage resulting from the breach of the representation and warranties.

3. Grantee's Representation and Warranties

From the effective date of this contract, the Grantee shall maintain the Property in confidence, exercise the same degree of care that the Grantee exercises with their own proprietary information.
If the Grantee becomes aware of any act which may require compromising confidentiality with regard to property, such as a Court order that requires all the documents of the property to be produced, the Grantee shall notify Grantor thereof and consult with the Grantor regarding such compromises.
To the extent that Grantee's negligence results in personal injury or property damage hereunder, the Grantee indemnifies Grantor and shall hold harmless for any and all injuries, losses, damages, and claims in the course of utilizing the property. 

4. Royalty

In consideration of the rights and licenses granted by the Grantor, the Grantee agrees to pay Grantor an amount of $[0.00] at the time of execution of this contract. Further consideration of the rights and licenses granted by the Grantor, the Grantee agrees to pay the Grantor [00.00]% of the net profits, capitalized at the end of each calendar quarter.

5. Profits

Profits here means that the total revenue received by the Grantee by using the property, other than:
Manufacturing and marketing expenses, which involves commission payable to a third party.
Direct and administrative expenses, excluding taxes and 
All other payables are excluded by written approval of the Grantor.

6. Royalty Payments

The Grantee shall keep an accurate account of the revenue generated under the granted rights hereunder and shall write a statement to the Grantor at the end of every calendar month during the term of the Contract.
The payment shall be made to [Grantor's Name], [Grantor's Address] through [Payment Mode] under this contract.
In the event the Grantee fails to provide the statement to the Grantor that should be subsequently paid within [number of days] days, the Grantee shall pay a late fee of $[0.00]

7. Term and Termination

The term of this contract shall begin from [Date] and will remain effective till [End Date]. The Grantee may terminate this contract, providing written notice to Grantor thereof if:
A petition of bankruptcy or insolvency law is filed by or against the Grantor, or  
The Grantor commits a material breach under the contract and fails to correct it.
The grantor or grantee may terminate this contract before the agreed termination time by providing written notice of [Number of days] days. 

8. Indemnification

Except for any breach, neither party shall be liable for any claims of any personal injury and property damage suffered by the other party or third party, resulting from either Party's activities under this contract.

9. Arbitration

In the event of any dispute arising in and out of this contract between the Parties, it shall be resolved by Arbitration. There shall be [Number of Arbitrators] Arbitrators which shall be appointed by [Party Name]. The venue of Arbitration shall be [Venue/Location of Arbitration] and seat shall be [State of Seat]. The Arbitrators' decision shall be final and will be binding on both the Parties.

10. Miscellaneous

Governing Law: The contract shall be construed in accordance with the laws of the [State].
Severability: In the event that any provision in this Contract is held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provisions of this Contract and all other provisions will remain in full force and effect.
Assignment: This contract shall not be assigned to any third party without the prior written consent of either party.
Notice: Any notice permitted under this contract shall be given sufficiently if delivered in person or certified through email. A return receipt is requested to the address outlined in the opening paragraph of the contract.
Amendment: No modification or waiver of the provisions of this Contract shall be valid or binding on either Party unless in writing and signed by both Parties.

Acceptance and Signature

IN WITNESS WHEREOF, both parties agree to the Terms and Conditions of the Royalty Contract, and provide their acceptance by signing below:

[Grantor's Name]

[Grantee's Name]

Signature

Assign signer 1

Name

Assign signer 1

Date

Assign signer 1

Signature

Assign signer 2

Name

Assign signer 2

Date

Assign signer 2

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DISCLAIMER: Revvsales, Inc is not a law firm. The content provided herein is for general information purposes only, and does not constitute legal advice. Revvsales, Inc and its partners make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information mentioned hereunder. The use or reliance of any information contained herein is for your personal use and solely at your own risk. You agree to fully release and indemnify Revvsales, Inc from any liability associated with the use of this content. You are advised to obtain independent legal advice before taking or refraining from any action on the basis of the content provided here.

Free Royalty Contract Template

This standard Royalty Contract template includes all the necessary information to form an agreement wherein a Grantor grants the license to the Grantee to use his intellectual property in exchange for compensation, known as a royalty.

Get started with this template

Corporate and Commercial

Legal

Photography

Publishing

Software

Technology

Royalty Contracts: Why Is It Important To Have Them?

Intellectual property (IP) is an intangible creation of the human mind. These ideas, inventions, and innovations are one’s own and can be protected under Intellectual Property law from exploitation or monetization without permission.

Usually, songwriters, authors, and scientists do not know to fully exploit the commercial use of their patented inventions. In such cases, the Royalty contract plays a role. A royalty contract helps one to provide a license to use his/her intellectual property for monetary compensation.

What is a standard royalty contract?

Usually, a royalty contract is signed when the licensor (innovator) wants to license the idea’s intellectual property rights to a licensee to use the IP. It is a legally binding commitment, and it provides the licensee with all such rights to use the licensor’s intellectual property. All of this is done under specific terms and in exchange for an agreed payment between both.

What are the benefits of having a royalty contract?

Typically, a royalty contract benefits both the licensor and the licensee. The licensor makes money by selling the property/ product in the market, and the licensee gets a share. Having a contract is always beneficial when money is a primary aspect of the deal.

Apart from this, there are other benefits of a contract, like:

A contract provides proof of agreed terms and conditions by both parties,
It involves each party's desires and obligations, which helps to build a trusting relationship,
In case of any breach, both parties are already aware of the terms to follow,
It outlines the payment terms, such as the profit percentage or purchase price,
Contracts guarantee confidentiality and non-disclosure provision of sensitive information.

What are the important terms to draft a royalty contract?

Usually, terms and conditions depend on the complexity of the commitments made by both parties. It is always better to understand the terms before getting into a contract. Below are a few standard terms, contractual obligations, and other provisions that a basic royalty contract contains:

Parties to the contract: This section defines the parties involved in the contract. It includes the names of the licensee and licensor and their respective addresses.
Recitals/ Preamble: It is a significant section of a contract. It outlines the contract's purpose, specifies the parties involved, and their willingness to enter the contract.
Terms and conditions: This is the key part of any contract. It makes the parties aware of their rights and obligations. A standard terms and conditions section includes clauses such as:
- Rights of granting: In this section, the grantor/ licensor agrees to provide all rights to the grantee/ licensee to use the property for an agreed time.
- Grantor’s representation and warranties: This section talks about the relevant documentation the grantee should receive and also the grantor’s rights to use the property.
- Grantee’s representation and warranties: It involves specific terms that the grantee should follow, such as maintaining the property in confidence, and shouldn’t compromise with confidentiality.
- Royalty: It speaks about the royalty rate the grantee agrees to pay the grantor while signing the contract. This amount is basically for the rights and licenses granted by the licensor. It also includes a profit percentage from the gross revenues.
- Profits: This section outlines the total revenue and the terms to exclude from the gross profits.
- Royalty payments: It talks about the grantee’s duties, such as keeping a record of net sales, initial lumpsum, ongoing royalties, and other such payments.
- Term and Termination: This clause includes the contract’s effective date and rules for the contract's termination.
- Indemnification: In this clause, either party indemnifies and holds the other party harmless from any claim, damages, and injury under the contract.
- Arbitration: This clause explains how to resolve any disputes between both parties.
- Miscellaneous: It involves all other important clauses such as the governing law, entire agreement clause, amendment, waiver, and notice.
Acceptance and Signature: This section completes the contract. If both parties agree to the terms and conditions of the contract, then the deal will be closed with signatures.

How Revv makes drafting contracts easy?

Our contract templates are all vetted by legal professionals. This also ensures that all the important clauses are included in the contract.

Apart from this, here are a few benefits of using Revv for contract management:

Easy-to-use contract templates that are completely customizable according to your brand needs All the contract templates are easy to edit.
Collaborate seamlessly with stakeholders using comments or notes within the document.
eSign and close contracts with a click
Now drafting a contract and closing the deal is just a work of a few minutes.

With Revv, save your valuable time and remove the pain of drafting contracts from scratch!