Cooperation agreement: a guide to partnerships

What is a cooperation agreement?

A cooperation agreement is a legally binding contract between two or more parties who enter into a business cooperation. The agreement governs the parties' rights, obligations and liability in connection with the joint project or joint business.

Unlike an employment contract, the parties in a cooperation agreement are equal, and neither party is subordinate to the other. This also distinguishes the cooperation agreement from a consultancy agreement, where one party typically delivers a service to the other.

A cooperation agreement can cover anything from a one-off project to a long-term strategic partnership. What matters is that the parties have a shared interest in achieving a particular goal.

When do you need a cooperation agreement?

You should consider a cooperation agreement in the following situations:

• Joint business projects: two companies join forces to develop a product or a service
• Joint ventures: the establishment of a joint company or project with shared ownership
• Strategic partnerships: long-term cooperation on distribution, marketing or technology
• Freelancers and self-employed people: cooperation between independent parties on a joint task
• Research and development cooperation: joint innovation with shared IP

Even though Danish law does not require a written cooperation agreement, it is in practice indispensable. Without a written agreement, you risk disputes about liability, finances and rights that can be difficult to resolve.

What should a cooperation agreement contain?

A professional cooperation agreement should as a minimum cover the following points:

1. Identification of the parties

State the full names, addresses and CVR numbers of all parties. For sole proprietorships, the civil registration number may also be relevant if the CVR number is not sufficient for unambiguous identification.

2. The purpose and scope of the cooperation

Describe precisely what the cooperation is about. A vague wording like "the parties cooperate on business development" is not enough. State specifically:

• Which activities the cooperation covers
• Which products or services are to be delivered
• Which markets or customer segments are in play
• Any geographic limitations

3. The parties' roles and responsibilities

Define clearly who does what. For each party, the agreement should describe:

• Specific tasks and deliverables
• Deadlines and milestones
• Quality requirements and standards
• Reporting obligations and communication

4. Finances and allocation

Regulate the financial matters thoroughly:

• Cost allocation: who pays for what
• Revenue allocation: how profit (and loss) is shared
• Invoicing: procedures for payment between the parties
• Budgets: any joint budgets and approval procedures

5. Intellectual property (IP)

One of the most critical points in any cooperation agreement. Clarify clearly:

• Who owns the IP created in the cooperation?
• Do the parties have a licence to use each other's existing IP?
• What happens to jointly developed IP on the end of the cooperation?
• Are there limitations on the use of IP after the cooperation?

6. Confidentiality

The parties will typically share sensitive information. The agreement should govern:

• Which information is regarded as confidential
• How confidential information may be used
• The duty of confidentiality after the end of the cooperation
• Sanctions for a breach of confidentiality

It can be recommended to supplement with a separate confidentiality agreement (NDA) that can give more detailed protection.

7. Duration and termination

Set clear rules for the cooperation's timeframe:

• Fixed-term: the cooperation runs for a defined period
• Open-ended: the cooperation runs until a party terminates it
• Notice period: typically 1-6 months depending on the nature of the cooperation
• Cancellation: conditions for immediate termination on material breach

8. Dispute resolution

State how disagreements are to be resolved:

• Negotiation: the parties first try to resolve the dispute directly
• Mediation: a neutral third party helps find a solution
• Arbitration: an arbitration tribunal decides the dispute (often faster and more discreet than the courts)
• Court: as a last resort, stating the venue

The 5 most common mistakes in cooperation agreements

1. Unclear allocation of IP rights

Many cooperation agreements do not mention intellectual property at all, or word it so vaguely that both parties think they own everything. The result is often an expensive lawsuit when the cooperation ends. Be specific about who owns what, both existing and newly developed IP.

2. A missing exit strategy

What happens if the cooperation does not work? Without clear exit clauses, you risk being locked into an unprofitable partnership. Always define the conditions for termination and the practical consequences.

3. Too vague a description of roles

"The parties contribute equally" is a recipe for conflict. Define specific tasks, deliverables and deadlines for each party. The more specific the agreement, the fewer misunderstandings arise.

4. No regulation of finances

Many partnerships start with enthusiasm and postpone the financial details. That is a mistake. Clarify from the start how costs and income are allocated, and what happens if a party does not deliver.

5. A missing non-compete clause

Without a non-compete clause, your cooperation partner can freely start a competing project with the knowledge they have gained through your cooperation. Consider a clause that limits competition for a reasonable period after the end of the cooperation. A non-compete between independent businesses must be reasonable in time, geography and scope to be valid, under section 38 of the Contracts Act.

Cooperation agreement vs. other types of agreement

	Cooperation agreement	Consultancy agreement	Employment contract
Parties	Equal	Customer/supplier	Employer/employee
Liability	Shared as agreed	The supplier delivers	The employee performs
IP	Agreed specifically	Typically the customer's	The employer's
Termination	Notice period	Contract period	The Salaried Employees Act etc.
Tax	Own business	Own business	PAYE tax

Practical example

Scenario: Two software companies, TechDK and DataNord, want to develop a joint SaaS platform.

A good cooperation agreement would govern:

• TechDK handles frontend development, DataNord handles backend and data infrastructure
• Costs are shared 50/50 up to a budget of DKK 2 million
• Revenue from the platform is shared 50/50 after operating costs
• The IP in the platform's code is owned jointly, while each party's prior IP remains its own property
• 6 months' notice and a 12-month non-compete clause
• Quarterly steering-group meetings with equal representation
• Arbitration at the Danish Institute of Arbitration (Danish Arbitration) in the event of a dispute

Frequently asked questions

Is a cooperation agreement legally binding?

Yes. A cooperation agreement is a legally binding contract when it is made by parties with legal capacity for a lawful purpose. It does not have to be in writing to be valid, but an oral agreement is far harder to prove. Always use a written agreement.

What is the difference between a cooperation agreement and a partnership deed?

A cooperation agreement governs a looser partnership where the parties keep their independence. A partnership deed establishes an actual general partnership (I/S), where the participants are personally, directly and jointly and severally liable for the debt. If the cooperation involves joint liability, a partnership deed is the right choice.

Can I terminate a cooperation agreement unilaterally?

It depends on the agreement's terms. If the agreement has a notice period, it must be observed. Without a termination provision, the agreement can as a rule be terminated with reasonable notice. On material breach, the agreement can be cancelled with immediate effect.

What does it cost to have a cooperation agreement made?

At a lawyer's, a cooperation agreement can cost from a few thousand kroner and up, depending on the complexity. A well-designed template can cover most standard cooperations at a fraction of the price, while more complex or valuable partnerships should be reviewed by a lawyer.

Does a cooperation agreement have to be registered?

No, a cooperation agreement does not have to be registered. It is valid from the time of signature. If the cooperation instead establishes a general partnership that conducts business, the partnership typically needs a CVR number and may, depending on the circumstances, have to be registered with the Business Authority.

Conclusion

A cooperation agreement is the foundation of a well-functioning partnership. The most important elements are a precise description of the purpose and roles, a clear allocation of finances and IP rights, well-considered rules on confidentiality and termination, and a mechanism to resolve disputes. Spend time on the agreement while the mood is good, so you have a solid basis to fall back on if the cooperation later comes under pressure.