I. Current practice of amendment of cooperation agreements
A cooperation agreement (or cooperation contract) is one of the most common instruments in today’s business market. It serves as an important tool enabling individuals and organizations to cooperate, share resources and expertise in order to achieve common objectives.
During the performance of a cooperation agreement, various issues may arise that alter the initial arrangement, thus requiring amendments to the agreement so that it better reflects the parties’ actual intent. What does the law provide in this regard? Let us explore further with NPLaw below.
II. Legal provisions on amending cooperation agreements
1. What is a cooperation agreement?
A cooperation agreement (or cooperation contract) is an agreement between individuals or legal entities to contribute assets and/or efforts to perform a specific task, sharing both benefits and responsibilities, as provided under Article 504 of the Civil Code 2015.
2. How may the parties amend, remove, or supplement contents of a cooperation agreement?
Pursuant to Articles 403 and 421 of the Civil Code 2015, the parties may agree to amend a cooperation contract. Any amendment must comply with the form of the original contract. Amendments or supplements may be set out in a separate agreement, a contract addendum, or an independent civil agreement between the contracting parties.
Accordingly, the parties wishing to amend, remove, or supplement the terms of a cooperation agreement may:
- Conclude a contract addendum modifying or supplementing provisions of the original agreement; or
- Execute a new cooperation contract or agreement, depending on the nature and scope of the amendments.
3. Do addenda to cooperation agreements have legal effect?
Under Article 403 of the Civil Code 2015, addenda constitute contractual terms amended or supplemented after contract execution and take effect as part of the contract. Thus, an addendum to a cooperation agreement has the same legal validity as the principal contract, provided that its contents do not contradict the original agreement.
4. When are amendments permitted or prohibited?
As a general rule under Articles 403 and 421 of the Civil Code 2015, parties are entitled to agree on amendments and supplements. However, certain restrictions apply:
- Third-party beneficiary contracts: Under Article 417 of the Civil Code 2015, once a third party has accepted benefits under the contract, the contracting parties may not amend or cancel the agreement without the third party’s consent, even if the contract has not yet been performed.
- Amendments required by law: In some cases, amendments are not based on mutual agreement but are mandated by law. For example, Article 420 of the Civil Code provides that contracts may be amended due to a fundamental change of circumstances, subject to the following conditions:
+ Circumstances changed objectively after contract execution;
+ At the time of execution, the parties could not foresee the change;
+ The change is so substantial that, had it been foreseen, the contract would not have been concluded or would have been concluded with entirely different terms;
+ Continuing performance without amendment would cause serious harm to one party;
+ The disadvantaged party has taken all necessary and reasonable measures to prevent or mitigate the impact but they are failures.
If the parties cannot reach agreement within a reasonable time, the court may decide on the amendment regardless of the parties’ consent.
III. Questions on amending cooperation agreements
1. Can one party unilaterally execute an addendum?
Under Article 421 of the Civil Code 2015, an addendum may not be executed unilaterally. For an addendum to be valid, all parties must agree and sign.
2. Does an addendum remain effective after the main agreement expires?
Pursuant to Articles 403 and 421 of the Civil Code 2015, an addendum is effective only as part of the principal agreement. If the main agreement terminates or becomes invalid, the addendum also ceases to be effective.
3. Which authority resolves disputes over cooperation agreements?
In principle, disputes arising under a contract or cooperation agreement are resolved according to the dispute resolution mechanism lawfully agreed upon by the parties in the contract or a separate written agreement.
Accordingly:
- If the parties agree on dispute resolution by commercial mediation, arbitration, or court, that agreement shall prevail.
- In the absence of such agreement, disputes not resolved by negotiation must be settled at the competent court.
Thus, disputes relating to cooperation agreements are resolved either by commercial arbitration or by the competent court, depending on the parties’ agreement.
4. May one party amend a cooperation agreement without notifying the other?
Under Article 504 of the Civil Code 2015, a cooperation contract is an agreement among individuals or legal entities to contribute assets and efforts for a specific task, sharing both benefits and responsibilities. Accordingly, any amendment or supplement requires notification and the consent of all parties, to ensure the protection of each party’s rights and interests.
IV. Legal consultancy services on amending cooperation agreements
The above provides NPLaw’s guidance on issues relating to amending cooperation agreements. For further questions or legal assistance, please contact NPLaw.
