Cooperation Agreements in General

In cooperation agreements, companies agree upon joint activities in order to achieve a common goal. The objective of a cooperation agreement may be, for example, a joint project between two or more companies.

This chapter discusses both contractual arrangements referred to as cooperation agreements, and ownership-based arrangements referred to as joint ventures. Such arrangements are also referred to as consortium agreements or collaboration agreements, which may refer to both contract- and ownership-based arrangements. The term is used, for instance, to describe a cooperation to advance a joint interest, such as standardization.

Cooperation agreements set out the framework for the parties’ cooperation. Cooperation strengthens the position of both parties, as they share their core competencies in order to achieve a common goal. When a company starts operating internationally, cooperation partners may be needed, for example, to gain knowledge of local circumstances. Cooperation arrangements may also be possible to use to spread risks between the parties.

Cooperation agreements may be valid until further notice, or for a fixed term. Issuing notice to terminate a cooperation agreement following lapse of a long periof of time may take the other party by surprise. On the other hand, the risk of a fixed term agreement is that it binds the parties even if the circumstances were to change materially. The risk factors may be reduced, for example, by inserting a provision into the fixed term agreement that allows for changes and amendments, as well as by agreeing upon a sufficiently long notice period for an agreement that is valid until further notice.