Legal regulations, and in particular the provisions of the Civil Code, specify a number of agreements frequently employed in business dealings. Yet, it must be borne in mind that the solutions offered by the drafters are not always in line with what is intended by the parties seeking to contract certain obligations. Under such circumstances, it should be noted that according to the principle of the freedom of contract, parties may structure the legal relationship between them at their own discretion unless the substance or the purpose of the legal relationship is contrary to its nature, statutory regulations, or public policy.
Based on the above capabilities, undertakings can conclude cooperation agreements. The cooperation agreement is not defined expressly under statute, thus giving the parties latitude in realigning it with their intended project. The agreement should above all specify what it is that it regulates. The parties have extensive freedom in that respect and may make all the aspects of their business they consider significant, as long as it is not unlawful to do so, subject to the contractual provisions. In turn, the subject-matter of the agreement determines as a rule the instrument’s level of detail; under the cooperation agreement the parties may both limit themselves to expressing their intention to undertake a joint business project, without stipulating any far-reaching obligations, and may also describe precisely their mutual obligations and consequences of failure to fulfil them. Cooperation agreements can be concluded to carry out one or a number of projects. In the practice of dealing, the cooperation agreement would often establish a mere framework for cooperation between two undertakings, with the specific arrangements being implemented on the basis of separate contracts.
It is a good practice in drafting cooperation agreements to incorporate in them provisions enabling their termination. If that is the case, both partners are fully aware how to end their mutual collaboration. If the parties fail to provide such procedure expressly under the terms of the agreement, the cooperation agreement expires with the expiry of the term for which it has been concluded. If the parties do not provide the term of the agreement concluded between them, then each of the parties is entitled to terminate it.
When the cooperation agreement is concluded, it is also worthwhile regulating the consequences of non-performance of the obligations adopted by the parties. In the case of agreements concluded above all to memorialise the intention to collaborate, the parties often stipulate that they do not accept any liability for the outcome of their respective actions. If the subject-matter of the cooperation agreement calls for a more extensive involvement of the parties and contemplates specific actions being taken by the parties or a specific outcome achieved by them, then the liability of the partners for non-performance or unsatisfactory performance of the agreement is greater. If the cooperation agreement specifies at length the mutual obligations of the parties and one of the partners fails to fulfil its obligations, then the wronged party may seek damages for non-performance or unsatisfactory performance of the concluded agreement under provisions of general application laid down under the Civil Code.
When signing the cooperation agreement, one should bear in mind that it is not the name of it that determines its legal status but above all the specific provisions incorporated in it. Consequently, it may happen that although the parties call the agreement concluded between them cooperation agreement, in fact it is a different type of nominate agreement governed under the applicable regulations. While the cooperation agreement is a highly flexible and attractive way to regulate commercial relations, but—as is true about any tool—it must be used prudently and skilfully, to ensure that the parties are comfortable with the result achieved by its execution.