Introduction
A cooperation or joint venture agreement sets out how two or more parties jointly run a business, project or activity without merging into one another. The agreement allocates the interest in a joint result and the risk that those interests will at some point diverge. The core lies in the question of who decides, who provides additional finance, who may compete and how a party exits. These questions are settled in advance, with an eye to the moment when the cooperation comes under strain.
The structure of the agreement
The structure follows the logic of the cooperation itself. First it records who the parties are and what they undertake together; then what each party contributes and how additional finance is provided; next how the venture is managed and decisions are taken and how the result is shared; then the clauses that protect the parties' positions during and after the cooperation; and finally the mechanisms for deadlock, exit and dispute resolution, together with the general provisions. In that order, each part builds on the previous one. The full structure may look as follows:
- Preamble: title, parties and recitals
- Definitions and interpretation
- Purpose and structure of the cooperation
- Contribution
- Financing and further contributions
- Governance and decision-making (reserved matters)
- Profit and loss sharing
- Intellectual property and results
- Exclusivity during the cooperation
- Non-competition after termination
- Deadlock and impasse
- Exit and transfer
- Liability
- Confidentiality
- Duration and termination
- Choice of law and forum
- Schedules
Preamble: title, parties and recitals
The preamble states the title of the agreement, the parties together with their corporate details and Chamber of Commerce (KvK) number, and a set of recitals. In a joint venture, attention should be paid to whether the cooperation remains purely contractual or runs through a separate joint-venture company; in the latter case that entity often becomes a party in its own right. The recitals outline the background, the intended purpose and any prior arrangements. They create no independent obligations, but are taken into account in interpreting the agreement in the event of a dispute.
Example recitals +
The undersigned: (1) [Party A] ("Majority Partner");
and (2) [Party B] ("Minority Partner");
whereas the Parties wish jointly to run [the Business] through [the JV Company] and wish to govern their relationship, have agreed as follows.
The Majority Partner prefers to keep the recitals brief and focused on the joint purpose. The Minority Partner has an interest in recording the background, the assumptions and the mutual expectations in full, because that context supports its position in the event of a dispute.
Definitions and interpretation
A consistent list of definitions prevents disputes over key concepts such as the Business, the Project, the Contributions, the Results, a Change of Control or a Deadlock. Definitions that carry financial or control consequences elsewhere, such as "Qualified Resolution" or "Competing Activity", must be precisely delineated, because that is exactly where the sharpness of the arrangement lies. The interpretation clause sets out the rules of construction and the order of precedence between the main text and the schedules.
Example definitions +
"Qualified Resolution" means a resolution as set out in Schedule [x];
"Competing Activity" means [precisely described activity] within [territory] during [period];
"Deadlock" means the failure to adopt a Qualified Resolution after [two] consecutive meetings.
The Majority Partner wants broad, workable definitions that do not obstruct operations. The Minority Partner attaches importance to tightly delineated definitions, because the scope of its veto rights and protections depends on them.
Purpose and structure of the cooperation
This provision describes what the parties undertake together, within what boundaries and through which legal structure, a contractual cooperation, a partnership or a joint-venture BV. It records what does and does not fall within the cooperation, because a broad or vague description of purpose makes later disputes over exclusivity and competition unnecessarily difficult. The duration of phases, the milestones and the relationship to the parties' existing activities also belong here.
Example clause +
The purpose of the cooperation is [description of the activity]. It comprises solely [defined scope] and does not extend to [the Parties' existing activities]. The cooperation is conducted through [the JV Company / a contractual cooperation].
The Majority Partner prefers a broad description of purpose that allows for growth and adjustment. The Minority Partner wants a sharply delineated scope, so that the investment is not imperceptibly extended to activities it did not sign up for.
Contribution
For each party it is recorded what is contributed, capital, assets, knowledge, staff or client relationships, and at what valuation. The contribution determines the initial ratio between the parties and forms the basis for control and profit-sharing. A precise specification with valuation prevents later disputes over whether a party has delivered its promised contribution in full, and at what value a non-cash contribution counts.
Example clause +
The Majority Partner contributes: [capital of EUR ... and assets as described in Schedule [x]]. The Minority Partner contributes: [knowledge, staff and client relationships as described in Schedule [x]], valued at EUR [amount]. The value contributed determines the initial ratio of [..%] / [..%].
The Majority Partner wants the other party's non-cash contribution valued conservatively, so that its own capital is not diluted. The Minority Partner has an interest in its knowledge, staff or client relationships receiving a realistic valuation that is recognised in the ratio.
Financing and further contributions
In addition to the initial contribution, follow-on financing is arranged: who provides further capital, in what ratio, and what the consequences are if a party fails to make a capital contribution. Dilution or subordination mechanisms and the question of whether a defaulting party loses control or its stake should be arranged explicitly here. A financing obligation without a sanction offers little certainty in practice, because performance must then ultimately be enforced through proceedings.
Example clause +
Additional financing is provided by the Parties in proportion to their interests within [30] days of a request to that effect. If a Party fails to do so, the other Party may make up the shortfall, with dilution of the defaulting Party's interest in accordance with the formula set out in Schedule [x].
The Majority Partner wants an enforceable obligation to contribute further capital with a hard dilution sanction, so that the business remains financed. The Minority Partner wants protection against forced dilution, for example a right not to contribute without a disproportionate loss of existing rights.
Governance and decision-making (reserved matters)
This provision governs how the venture is managed and decisions are taken: the composition of the board and any steering committee, the rights of appointment and removal, the quorum for meetings, and which resolutions require an enhanced majority or unanimity. That last category, the reserved matters or qualified resolutions, forms the core of the balance of power. Examples are budgets above a threshold, new financing, amendment of the articles of association, the sale of core assets and the admission of new partners.
Example clause +
The following resolutions require the prior consent of both Parties: (i) adoption of, or exceeding, the budget above EUR [amount];
(ii) entering into financing;
(iii) amendment of the articles of association;
(iv) the sale of core assets;
and (v) the admission of a new partner.
The Majority Partner keeps the list of reserved matters short in order to remain decisive, and records decision-making and the provision of information transparently in order to avoid claims of prejudice. The Minority Partner, by contrast, protects itself through a broad list of reserved matters with rights of information and supervision, but limits its vetoes to resolutions that materially affect the investment in order to avoid blockages.
Profit and loss sharing
It is determined how results are shared: in proportion to contribution, according to a fixed ratio, or through a waterfall structure that gives priority to the repayment of financing. The dividend and distribution policy, the treatment of losses and any obligations to contribute further capital are also arranged. In project-based cooperations, a clear method of settlement per project is essential, including the treatment of outstanding invoices and of costs that one party incurs on behalf of the cooperation.
Example clause +
After repayment of the financing provided by the Parties, the result is shared in the ratio [..%] / [..%]. Distribution takes place annually to the extent that liquidity permits and after a reserve of EUR [amount] has been set aside. Costs that a Party incurs on behalf of the cooperation are settled on presentation of supporting documents.
The Majority Partner wants scope to reserve profit and reinvest it in the business. The Minority Partner has an interest in a predictable distribution policy with periodic accountability, so that the return on its contribution does not remain tied up in the business indefinitely.
Intellectual property and results
It is recorded who owns the intellectual property that existed before the cooperation (background IP) and what is developed during the cooperation (foreground IP). It is arranged whether new results accrue to the joint venture, are held jointly or are transferred to one party, and which licences the parties grant one another, including for the period after termination. Without a clear allocation, a dispute arises at the end of the cooperation over who may continue to use the technology, data or trademarks developed.
Example clause +
Background IP remains the property of the contributing Party, which grants the cooperation a non-exclusive licence to it for the duration of the cooperation. Foreground IP accrues to [the JV Company]. After termination, each Party retains a [non-exclusive, perpetual] licence to the Foreground IP for [defined purposes].
The Majority Partner wants the results developed to remain available if the business is continued under its leadership. The Minority Partner wants a guaranteed licence to the foreground IP after termination, so that its contribution of knowledge and development remains usable after withdrawal.
Exclusivity during the cooperation
It is determined to what extent the parties are exclusively bound to the joint venture during the cooperation and whether they may also pursue their own activities. The concept of "competing activity" is described precisely and limited in duration, territory and scope. The boundary between permitted own activities and impermissible competition is sharp and context-dependent; what is permitted depends on the arrangement and on reasonableness and fairness (Section 2:8 DCC).
Example clause +
During the cooperation, the Parties refrain from Competing Activities within [territory] and first offer business opportunities that fall within the scope to the cooperation. Existing activities as described in Schedule [x] remain permitted.
The Majority Partner wants broad exclusivity that channels all relevant opportunities to the cooperation. The Minority Partner wants its existing, non-competing activities expressly excluded, so that the tie to the cooperation does not affect its other business.
Non-competition after termination
For the period after the cooperation, a non-competition and non-solicitation clause is often included, so that a withdrawing party does not immediately erode the market and client position built up jointly. The scope and duration must be proportionate to the interest to be protected, failing which the court will limit or set aside the clause. A clearly delineated clause prevents the question of whether later activities are permitted from depending entirely on the circumstances.
Example clause +
For [12] months after termination, a withdrawing Party shall not, directly or indirectly, compete within [territory] with the business of the cooperation, nor approach clients or employees of [the JV Company].
The Majority Partner, which continues the business, wants a long-term and broad clause that protects the position built up. The Minority Partner wants a short, narrowly described restriction, so that after withdrawal it retains its own freedom to do business.
Deadlock and impasse
With a 50/50 ratio or broad veto rights, a stalemate is predictable. A deadlock provision first describes an escalation ladder, from the board to the parties, then a mediation or expert phase, and then offers a last resort. Common mechanisms are a shoot-out (for example a Texas or Russian roulette), a buy-sell option at a fixed valuation, or dissolution of the cooperation. The chosen mechanism works out fundamentally differently for the stronger and the weaker party.
Example clause +
In the event of a Deadlock, the Parties first refer the matter to [their ultimate shareholders] and then to an independent [mediator/expert]. If the impasse continues for [30] days, the [shoot-out / buy-sell option at a value determined by an independent expert] applies.
The Majority Partner usually has the financial room to take over the other's stake in a shoot-out, and wants a mechanism that allows the cooperation to continue under its own leadership. The Minority Partner benefits from an independent valuation and from the certainty that the impasse will not continue indefinitely, so that its investment does not become trapped.
Exit and transfer
It is arranged when and how a party may withdraw or transfer its interest. Standard building blocks are a lock-up period, an obligation to offer combined with a right of first refusal, tag-along (a minority co-sale right), drag-along (a co-sale obligation imposed by the majority) and a valuation method for forced transfers on breach or change of control. It is recorded in advance which events justify a transfer and at what price, because a claim for transfer following a failure to perform is a real scenario.
Example clause +
A Party wishing to transfer its interest first offers it to the other Party (right of first refusal). On a sale to a third party, a tag-along applies in favour of the Minority Partner and a drag-along in favour of the Majority Partner. In the event of breach, the interest may be claimed at [80]% of the value determined by an expert.
The Majority Partner wants a drag-along, so that on a sale it can deliver the entire business. The Minority Partner wants a tag-along and an independent valuation, so that on a sale it can share in the proceeds and is not bought out at an unfavourable price.
Liability
Liability is limited and allocated between the parties and towards the joint venture. Liability is arranged for shortcomings in the contribution, for warranties given and for loss that one party causes to the cooperation. Customary are an exclusion of indirect and consequential loss, a cap per event and per year, and exceptions for intent, wilful recklessness and breach of confidentiality or IP rights. The limitations are calibrated to the size of the contribution and the risk profile of each party.
Example clause +
The liability of each Party is limited to EUR [amount] per event and EUR [amount] per year. Indirect and consequential loss are excluded. The limitations do not apply in the event of intent, wilful recklessness or breach of the confidentiality or IP provisions.
The Majority Partner, with the largest contribution and operational role, wants a firm cap on its liability. The Minority Partner wants the liability cap not to be so low that a shortcoming in the other's contribution or governance effectively remains without consequence.
Confidentiality
Within a cooperation, sensitive commercial, technical and financial information is shared. It is recorded what counts as confidential, for which purposes information may be used, who is given access and how long confidentiality continues after termination. The clause is linked to a penalty or damages (Section 6:91 et seq. DCC), with a provision for the return or destruction of confidential information on termination. It is precisely when partners part ways that misuse of shared knowledge is a concrete risk.
Example clause +
The Parties treat all information obtained in the context of the cooperation as confidential and use it solely for the cooperation. Confidentiality continues until [three] years after termination. In the event of breach, an immediately payable penalty of EUR [amount] is due, without prejudice to the right to damages.
The Majority Partner wants broad confidentiality that protects the operation of the business. The Minority Partner wants the same protection for the knowledge and client relationships it has contributed, with a clear obligation to return or destroy information after termination.
Duration and termination
The duration (fixed or indefinite), the possibilities and periods for termination by notice, and the grounds for interim termination or rescission, such as breach, insolvency or change of control, are determined. The consequences of termination are arranged precisely: the settlement of current obligations, the return of contributions, the continuation or transfer of the joint-venture entity and the survival of the confidentiality, IP and non-competition provisions. Termination by notice without clear conditions invites disputes over its validity and consequences.
Example clause +
The cooperation is entered into for [an indefinite period] and may be terminated by each Party by notice subject to a period of [six] months. Interim rescission is possible in the event of an attributable failure to perform after a notice of default, on insolvency or on a Change of Control of the other Party. On termination, the consequences referred to in article [x] are settled.
The Majority Partner wants scope to terminate the cooperation and continue the business independently. The Minority Partner wants a reasonable notice period and a clear settlement, so that a termination does not leave its investment without an orderly buy-out.
Choice of law and forum
It is recorded which law applies and which body resolves disputes, the ordinary courts, stating the competent district court, or arbitration. In cross-border joint ventures the choice of law is decisive, because a different applicable law materially affects the characterisation and interpretation of the agreement. The choice of forum is aligned with the deadlock and termination provisions, so that urgent relief and proceedings on the merits are brought before a single, predictable forum.
Example clause +
This Agreement is governed by Dutch law. Disputes are, at first instance, submitted exclusively to the competent court in [Amsterdam] / resolved by arbitration under the Rules of [the NAI].
The Majority Partner usually chooses the forum that is most familiar and accessible to it. The Minority Partner has an interest in a neutral, predictable forum and in dispute resolution that dovetails with the deadlock provision, so that an impasse does not fragment into several sets of proceedings.
Schedules
The schedules make the arrangements concrete and verifiable. Customary are a business plan or project plan, a budget and financing schedule, a specification of each party's contribution with valuation, a list of reserved matters, an overview of background and foreground IP, and models for valuation on exit or deadlock. An order-of-precedence provision determines what prevails in the event of a conflict between the main text and a schedule, usually the main text, so that schedules give effect to the arrangements without imperceptibly amending them.
Example schedules +
Schedule 1: Business plan and budget · Schedule 2: Specification of contribution and valuation · Schedule 3: Reserved matters · Schedule 4: Overview of background and foreground IP · Schedule 5: Valuation model on exit and deadlock.
The Majority Partner wants the operational schedules to leave room for implementation. The Minority Partner attaches importance to a precise contribution and valuation schedule and a clear list of reserved matters, because its protections rest on them.
What does this mean in a dispute?
Most disputes within a cooperation arise when interests diverge: over additional finance, over competing activities or over an impasse in decision-making. An agreement with clear definitions, a workable deadlock provision and a watertight exit limits that risk. If it does end in proceedings, the matter touches on the field of commercial litigation and, in the event of an impasse or prejudice within a joint-venture company, on shareholder disputes.