Parties of a Cooperation Agreement and the Binding Nature of the Agreement

In a cooperation agreement, the other party is generally another company. One of the parties may also be, for example, a university, a polytechnic, a research institute or a development center. The parties to a cooperation agreement are usually on an equal footing, and the parties’ respective obligations are similar. On the other hand, it is also possible for one of the parties to act as a coordinator only, leaving the other parties to carry out all practical obligations. All such matters should be clearly set out in the agreement.

As regards contractual liability, it is important to bear in mind that as a rule, cooperation agreements are only binding to the contracting parties. When entering into a cooperation agreement, the difference between a legal entity, such as a limited liability company, and the owners of the company, should be noted. If the purpose is to include obligations on a company in the cooperation agreement, the company must become a party to the agreement and not only its shareholders. Likewise, if the purpose is to bind the shareholders, it is not sufficient to include obligations on the company only, and the shareholders must also become parties to the agreement or otherwise become bound by its terms.

If a company receives financing or subsidies, for example from the European Union, it is important to pay particular attention to terms of a cooperation agreement.