Cooperation Agreement

SHORT ANSWER TO THE MAIN QUESTION

Under Czech law, a Cooperation Agreement may operate as an innominate agreement, meaning an agreement whose specific content is created by the parties according to their needs, provided it does not conflict with mandatory law.

That is highly practical because cooperation can take dozens of different forms.

At the same time, it means that the law will not automatically provide all the detailed rules that would normally apply to a specific statutory contract type.

The more general the title “Cooperation Agreement” is, the more precisely the agreement itself needs to explain what the cooperation actually involves.

Sometimes, once the relationship is properly analysed, it becomes clear that a general Cooperation Agreement is not needed at all.

The substance of the relationship may instead correspond to a works contract, mandate-type arrangement, brokerage, distribution, licensing or even an agreement establishing a joint venture-like relationship under Czech law.

YOU MAY BE THINKING…

“Can’t we simply write that we will cooperate with each other?”

“Do we really have to deal with everything in advance if we do not yet know how the project will develop?”

“Can we sign a framework agreement and agree individual projects later?”

“If we create something together, does it automatically belong to both of us?”

“If I bring in the customer, is that customer mine?”

“Can the other company also work with our competitors?”

“Who is responsible if the customer is unhappy?”

“And what happens if we want to terminate the cooperation in six months?”

These are exactly the questions a good Cooperation Agreement should address.

Not because the parties expect a dispute.

But because cooperation naturally creates areas where the parties’ interests overlap – and sometimes diverge.

THE REAL PROBLEM IN PRACTICE: THEORY VS REALITY

In theory, the agreement may say:

“The parties shall cooperate with each other in developing their business activities.”

Sounds good.

But what is either party actually required to do under that sentence?

Provide business contacts?

Find customers?

Provide technical services?

Develop a product?

Finance marketing?

Provide support?

Enter into contracts?

Invoice customers?

Simply provide assistance when requested?

Under Czech law, an agreement called a Cooperation Agreement may genuinely operate as an innominate contract if its rights and obligations are sufficiently clear.

But an arrangement informally described by the parties as “cooperation” may, depending on its actual substance, correspond much more closely to another recognised type of contract.

The key issue is therefore the actual content of the relationship, not the heading on the document.

That leads to one basic practical rule:

A Cooperation Agreement is not a legal drawer into which any commercial relationship can simply be placed.

First, you need to determine what the parties will actually do.

Only then can the contract be structured properly.

BIGGEST RISKS AND COMMON MISTAKES

The same problems repeatedly arise in Cooperation Agreements:

• the scope of cooperation is described in one vague sentence,
• it is unclear what constitutes an obligation and what is merely an expectation,
• the parties’ roles are not divided,
• nobody knows who communicates with customers,
• it is unclear who enters into contracts with third parties,
• the remuneration or method of calculating it is missing,
• joint costs are not allocated,
• there are no rules for approving expenditure,
• invoicing is unclear,
• nobody knows who “owns” the customer relationship,
• post-termination contact with customers is not addressed,
• rights to jointly created results are unclear,
• know-how is not protected,
• confidentiality rules are missing,
• personal data issues are ignored,
• liability towards third parties is unclear,
• liability between the parties is not properly allocated,
• competition issues are not addressed,
• there is no decision-making mechanism,
• individual projects are not properly commissioned,
• it is unclear whether a party may refuse a particular project,
• termination has not been thought through,
• nobody knows what happens to ongoing projects when the relationship ends.

A typical clause?

“The parties shall cooperate with each other in order to achieve their common business objectives.”

A nice introduction.

But almost no actual rule.

What is the common business objective?

Who determines it?

What level of effort must a party provide?

Is a specific result guaranteed?

Or is the party merely required to provide reasonable assistance?

The distinction between an obligation to perform a particular activity and an obligation to achieve a defined result can be crucial.

HOW TO APPROACH IT: REALITY, NOT THEORY

With a Cooperation Agreement, I would not start with a template.

I would start with a simple diagram:

Who → does what → for whom → for how much → who decides → who bears the risk → who owns the result.

Only then would I start drafting the contract.

1. Define the purpose of the cooperation

Not in marketing language.

In practical terms.

For example:

• joint product development,
• provision of complementary services,
• joint customer acquisition,
• commercial promotion of a particular solution,
• marketing cooperation,
• implementation of a joint project,
• technology cooperation,
• provision of capacity to the other party,
• long-term professional cooperation,
• a combination of several of these activities.

The purpose helps interpret the agreement.

But it is not enough on its own.

2. Allocate specific responsibilities

Company A:

• develops the software,
• provides technical support,
• trains customers.

Company B:

• finds customers,
• conducts commercial negotiations,
• carries out marketing,
• provides first-line customer support.

That is much more useful than:

“The parties shall provide each other with all necessary cooperation.”

A general cooperation obligation may be helpful.

It should not replace the description of the parties’ principal duties.

3. Define how individual projects arise

In a long-term relationship, it often makes no sense to describe every future project in the framework agreement.

The parties may instead use a mechanism such as:

framework agreement
→ purchase order
→ confirmation
→ individual project.

Or:

framework agreement
→ individual statements of work / project specifications.

The important question is:

At what point does a binding obligation to perform a particular project actually arise?

4. Structure the money

Fixed fee?

Hourly rate?

Commission?

Revenue share?

A combination?

Costs reimbursed separately?

And what if the customer does not pay?

For example:

“The parties shall share revenue 50/50.”

Sounds simple.

But 50% of what?

The invoiced amount?

Cash actually received?

Revenue after costs?

After refunds?

Discounts?

Platform fees?

Taxes?

Customer claims?

The percentage is easy. Defining the base to which the percentage applies is usually much harder.

5. Decide who deals with the customer

Is the customer legally a client of one party only?

Does the customer contract with both parties?

Does one party act as the main contractor and the other as a subcontractor?

Can one party legally bind the other?

Who invoices the customer?

Who handles complaints?

Who is liable towards the customer?

This needs to be distinguished from the internal division of work.

The customer may have no interest in the fact that, under the Cooperation Agreement, a particular part of the service was supposed to be provided by your business partner.

6. Address intellectual property

Cooperation may result in:

• software,
• graphics,
• text,
• databases,
• methodologies,
• documentation,
• technical solutions,
• brands,
• photographs,
• marketing materials.

The fact that:

“We created it together”

does not automatically mean:

“We both own half of it.”

The agreement should determine:

• who owns or controls the relevant rights,
• who may use the result,
• for what purpose,
• for how long,
• whether sublicensing is permitted,
• what happens after the cooperation ends.

7. Regulate customers and business contacts

This is often one of the most sensitive areas.

Who introduced the customer?

Who may continue doing business with them?

Is the customer considered “joint”?

What if the customer independently approaches the other party?

What happens after termination?

Is there exclusivity?

A non-circumvention mechanism?

Restrictions on direct solicitation?

These rules need commercial logic, but also appropriate legal limits.

8. Prepare for the end from the beginning

How can the agreement be terminated?

What is the notice period?

What happens to ongoing projects?

Who completes existing customer engagements?

Who receives commission that has already accrued?

Who returns documents and data?

What happens to access credentials?

How long does confidentiality survive?

What happens to licences?

A good Cooperation Agreement does not regulate only how the relationship begins. It also provides for a civilised way to end it.

PRACTICAL EXAMPLES

👉 Two companies jointly offer a service

Company A provides the technology.

Company B has the customer base and sales team.

They agree:

“We’ll sell the service together and split the revenue.”

For the first year, everything works.

Then Company B enters into a major contract with one customer and says:

“We brought in this customer, so the revenue split no longer applies.”

Company A replies:

“But the customer is buying a service built on our product.”

Who is right?

Without clear rules on customers, business opportunities and remuneration, perhaps nobody knows.

👉 Joint product development

Two companies develop an application together.

One provides the original software.

The other finances a new module and contributes commercial know-how.

After two years, they part ways.

Both want to continue using the product.

Both say:

“It would never have existed without us.”

That may be true.

But it still does not tell us who has which rights.

That is why intellectual property is best dealt with before a valuable result is created, not during the break-up.

👉 The “partner” starts working with a competitor

For several years, a commercial partner has access to:

• pricing,
• business strategy,
• customers,
• internal processes,
• planned products.

Then they begin providing similar services to a competitor.

The first company says:

“You obviously cannot do that.”

The other replies:

“There is nothing in our agreement that prevents it.”

Not everything that seems obvious during a successful cooperation automatically becomes a contractual obligation.

WHY YOU SHOULD BE CAREFUL WITH “I’LL DO IT MYSELF”

A generic Cooperation Agreement is particularly deceptive.

Why?

Because it almost always looks professional.

It has:

• introductory provisions,
• scope of cooperation,
• rights and obligations,
• confidentiality,
• duration,
• final provisions.

At first sight, finished.

But its quality is not determined by the number of clauses.

It is determined by whether the contract reflects the real flow of the cooperation.

A generic template does not know:

• what the parties actually produce or provide,
• who finds customers,
• who enters into contracts,
• who invoices,
• who bears the costs,
• what the cooperation produces,
• who owns the result,
• how remuneration is calculated,
• who decides when the parties disagree,
• whether a partner may work with competitors,
• how individual projects are commissioned,
• who bears the cost of customer claims,
• what happens after termination.

And there may be an even more fundamental problem.

Once the relationship is properly analysed, it may become clear that the so-called “cooperation” actually corresponds to another legal regime.

For example:

“You will provide marketing services for us every month for CZK 30,000.”

This may essentially be a service arrangement.

“You introduce customers to us and receive commission if we enter into a contract with them.”

This may be brokerage.

“We both contribute resources and pursue a common purpose together.”

This may require an assessment of whether the relationship corresponds to a partnership-type arrangement under Czech law.

“You will develop a specific application for an agreed price.”

This may be much closer to a works contract.

Calling the document a “Cooperation Agreement” does not override the actual substance of the legal relationship.

LAWYER’S RECOMMENDATION + CHECKLIST

With a Cooperation Agreement, I use one simple test:

Can each party explain in their own words exactly what they are required to do during an ordinary month, what they are paid for and what they are responsible for?

If their answers differ significantly, the agreement is not ready.

Quick checklist

• The actual purpose of the cooperation is defined.

• The specific obligations of each party are described.

• Mandatory performance is distinguished from general cooperation.

• It is clear how individual projects or orders arise.

• It is clear who may accept an order.

• A change-request mechanism exists.

• Remuneration is defined.

• The basis for any commission or revenue share is precisely defined.

• Costs are allocated.

• It is clear who invoices the customer.

• It is clear who enters into contracts with third parties.

• Liability towards customers is addressed.

• Liability between the parties is addressed.

• Customer complaints are addressed.

• Intellectual property is addressed.

• Know-how is protected.

• Confidentiality is regulated.

• Personal data issues are addressed.

• Rules for dealing with customers are defined.

• Any exclusivity arrangement has been considered.

• Competition and circumvention issues are addressed.

• A decision-making mechanism exists.

• The duration of the agreement is defined.

• Termination and notice periods are addressed.

• Ongoing projects after termination are dealt with.

• Post-termination remuneration is addressed.

• Documents, data and access credentials must be returned or transferred.

• It has been verified whether the relationship actually corresponds to another contract type.

FAQ

What is a Cooperation Agreement?

A Cooperation Agreement is a general term for a contract under which parties regulate how they will work together.

The Czech Civil Code does not provide one universal statutory contract type called a “Cooperation Agreement”.

Depending on its actual content, the arrangement may operate as an innominate agreement created under the principle of contractual freedom, or it may in substance correspond to a specific statutory contract type.

Is a Cooperation Agreement an innominate agreement under Czech law?

Often, yes.

Czech law allows parties to conclude contracts that are not expressly regulated as specific statutory contract types.

However, what matters is not that the document is labelled an “innominate agreement”, but what rights and obligations it actually creates.

What should a Cooperation Agreement contain?

There is no single universal list suitable for every relationship.

In practice, the agreement should usually make clear:

• the roles of the parties,
• their obligations,
• how individual work is commissioned,
• remuneration,
• costs,
• liability,
• rights to results,
• customer relationships,
• confidential information,
• duration and termination.

Can a Cooperation Agreement be a framework agreement?

Yes.

For long-term relationships, this is often highly practical.

The framework agreement establishes the general rules, while specific projects may be agreed through individual orders, project specifications, statements of work or amendments.

The contract should nevertheless define precisely when an individual assignment becomes binding and which terms apply to it.

Is a Cooperation Agreement the same as a partnership agreement?

Not automatically.

Czech law has a separate statutory regime for arrangements where several persons associate in order to pursue a common purpose.

Simply using the word “cooperation” does not create such a legal relationship.

However, the actual way in which the parties pool resources, share risks and pursue a common purpose may need to be assessed carefully.

Can a Cooperation Agreement be terminated at any time?

There is no universal answer for all Cooperation Agreements.

It depends on the legal regime applicable to the agreement and the termination rules agreed by the parties.

This is why notice, notice periods and the treatment of ongoing projects should be regulated expressly.