Cooperation Agreement in 2026: Insights from Legal Practice and Setting Terms with Partners

Do you need to draft a collaboration agreement that protects your business while accurately reflecting how the collaboration actually works? We can help you draft or review the agreement based on your specific situation.

What Is a Collaboration Agreement?

In practice, the term “collaboration agreement” encompasses a wide range of contractual relationships. It can govern the long-term provision of marketing services, software development, commercial representation, website management, accounting, or, for example, the regular work of an external consultant.

The Civil Code does not recognize a separate contract type called a “cooperation agreement.” However, it does allow the parties to enter into a contract that is not expressly regulated as a specific type. In practice, therefore, a cooperation agreement is often drafted as a so-called “unnamed contract.” At the same time, however, if its content corresponds to a contract type regulated by law—such as a contract for services—the relevant rules for that contract type apply. The content of the contract is therefore decisive, not merely its title.

This has fundamental practical significance. It is not enough to download a document titled “Cooperation Agreement,” fill in the names, price, and signatures. First, you must answer the question of what the collaborator is actually supposed to do, how independently they are to proceed, who will bear the business risk, and what result you expect from them.

The contract should reflect how the relationship actually functions. If the text states that the contractor works completely independently, but they sit at your workplace every workday from nine to five, use only your equipment, receive ongoing binding instructions, and function within your team just like other employees, the formal wording of the contract alone will not protect you. When assessing whether work is illegal, the actual manner in which the work is performed is examined.

How to Structure a Contract with a Contractor

When deciding how to structure a contract with a collaborator, start not with legal language, but with the business model itself. A contract with an external graphic designer who receives individual assignments and submits finished work will look different from a contract with a consultant who helps you manage a specific project for six months.

The more precisely the contract reflects the actual nature of the collaboration, the less room there will be for disputes later on.

Clearly define who is entering into the contract

The contract must clearly state who is the client and who is the collaborator. For a self-employed individual, be sure to include their name or business name, registered office, and identification number. For a legal entity, also verify who is authorized to sign the contract.

For a collaboration agreement with a self-employed individual, we also recommend verifying the collaborator’s business license and, above all, whether it covers the activities they are to perform under the agreement. The Trade Licensing Act defines a trade as a systematic activity carried out independently, in one’s own name, at one’s own risk, and for the purpose of making a profit. It is precisely this independence and personal responsibility of the entrepreneur that distinguish a business collaboration from employment.

Describe the scope of the collaboration so that it is clear what you are actually purchasing

One of the most common mistakes is a very general provision such as “the contractor will provide marketing services according to the client’s requirements.” Such wording may be insufficient both in the event of a dispute over the quality of performance and when assessing the actual nature of the relationship.

It works better if the contract specifies what services the contractor provides, how individual tasks are assigned, what the expected outcome is, the deadlines for completion, and how the client will accept the results.

In some professions, it is possible to work toward a specific deliverable. For example, a programmer will deliver a specific system function, a graphic designer will create defined materials, and a consultant will prepare an analysis. In other cases, the collaboration is ongoing. In such cases, it is advisable to describe the scope of services provided and the method for assigning individual tasks.

However, the contract does not need to anticipate every task down to the last detail several years in advance. It can establish a framework for the collaboration, with subsequent assignments addressed through purchase orders, addenda, or other agreed-upon procedures. The Civil Code allows the parties considerable flexibility in defining the terms of their contractual relationship.

Clearly specify the price, invoicing, and payment terms

The contract should specify how much the contractor will be paid and for what. This may be a fixed amount for a specific result, a regular fee for a certain scope of services, or, for example, an hourly rate.

An hourly rate alone does not automatically mean that the relationship constitutes employment. When assessing dependent work, the relationship is evaluated as a whole. Factors such as a superior-subordinate relationship, personal performance of work, working on behalf of the other party, and following the other party’s instructions may be particularly significant. The Supreme Administrative Court has long emphasized that administrative authorities must demonstrate that the defining characteristics of dependent work are met and cannot classify a business collaboration as illegal employment based solely on a single isolated characteristic.

In addition to the amount of compensation, we recommend specifying in the contract the point at which the right to payment arises, as well as invoicing, due dates, and any associated costs. This will help prevent disputes, for example, over whether the agreed-upon amount included travel expenses, paid-for tools, licenses, or work performed by subcontractors.

Specify Liability for Errors and Remedies

If a contractor delivers work late, in poor quality, or not at all, the contract should address what will happen next. Therefore, clarify how the work will be inspected and accepted, how much time the contractor will have to remedy any deficiencies, and when you may resort to other contractual remedies.

For more significant collaborations, it also makes sense to address compensation for damages and potential contractual penalties. However, it is necessary to specify exactly which breaches trigger them and how their amount is determined.

Based on our experience, we recommend against using contractual penalties as a blanket deterrent for any breach of contract. It is much more effective to link them to specific obligations whose breach could genuinely cause problems for your business, such as a breach of confidentiality or the misuse of sensitive data.

Don’t Forget About Confidentiality and Trade Secrets

A contractor often gains access to information that you would not normally disclose to the public or to competitors. They may be aware of your prices, business strategy, customer list, technical procedures, advertising campaigns, or internal financial data.

The Civil Code protects trade secrets with regard to competitively significant, identifiable, valuable, and generally inaccessible facts related to a business, provided that the owner ensures their confidentiality in an appropriate manner. The law also protects against the unauthorized disclosure or use of trade secrets. However, your own contractual confidentiality provisions will allow you to define much more precisely what you consider confidential and how a business partner must handle this information.

A well-drafted confidentiality agreement should also cover the period following the termination of the business relationship. After all, an employee’s departure does not generally mean that the information to which they had access ceases to be sensitive.

Resolve Copyright Issues Regarding Work Products

Companies very often underestimate this part of the contract. If a self-employed individual creates a logo, text, photographs, graphics, software, or any other result that may constitute a copyrighted work, paying the invoice does not automatically make you the author. According to copyright law, the author is the individual who created the work.

For a typical work created on commission, the law generally presumes that the author has granted the client a license for the purpose specified in the contract, unless otherwise agreed. If you wish to use the work in a broader manner, modify it, or provide it to others, it is therefore advisable to explicitly specify the scope of the license in the contract.

The difference compared to an employee can be significant. In the case of a work created by an employee, the employer exercises the economic copyrights in their own name and for their own account under the conditions set forth by law. This is precisely why a collaboration agreement with a self-employed individual should always include provisions on intellectual property whenever the collaborator creates valuable content or other protected outputs.

Agree in advance on how the collaboration will end

Everyone often reads the contract thoroughly before the collaboration begins, but its end is often overlooked. Yet it is precisely the termination of the relationship that tends to be the moment when an inadequate contract causes the greatest complications.

Therefore, specify whether the contract is for a fixed or indefinite term, whether it can be terminated, how long the notice period will be, and whether either party may terminate the relationship sooner in the event of a material breach of obligations. The Civil Code stipulates that an obligation may be terminated if the parties so agree or if the law so provides, and upon termination, the obligation generally ceases upon the expiration of the notice period.

Do not leave the rules for terminating the collaboration until the parties are no longer able to communicate reasonably with one another. A good contract addresses the end of the relationship while the relationship is still running smoothly.

Cooperation Agreement with a Self-Employed Individual: When Is It Truly a Business Relationship?

A cooperation agreement with a self-employed individual is entirely legitimate if it truly involves a relationship between two independent business owners. A business owner may use the services of another business owner and is not required to hire every person with whom they collaborate on a long-term basis.

The Trade Licensing Act defines business, among other things, as being independent, carried out in one’s own name, and at one’s own risk. In contrast, the Labor Code defines dependent work as an activity performed within a relationship of superiority and subordination, in the employer’s name, according to the employer’s instructions, and personally by the employee. Dependent work is performed for compensation, at the employer’s expense and under the employer’s responsibility, during working hours at the employer’s workplace or at another agreed-upon location.

It is precisely this difference between the two models that you must take into account when establishing a business relationship.

With a true contractor, you typically commission a service or a specific deliverable, while the way the work is organized remains largely up to the contractor. The contractor bears their own responsibility, may incur their own expenses, applies their own business expertise, and does not act merely as another link in your organizational structure.

This does not mean that you cannot assign any tasks to an external contractor or set a deadline. The client can, of course, specify what they want delivered, by when, and to what standard. Otherwise, most commercial contracts would not be able to function at all. The difference lies primarily in whether you are managing the desired outcome and service parameters, or whether you are effectively managing the person themselves as if they were your employee. The assessment must always be based on all the circumstances of the specific case.

Collaboration with a Sole Proprietor: Conditions You Should Know

The first condition is, of course, that the person must have the appropriate authorization to conduct business. According to the Trade Licensing Act, the general requirements for a natural person to operate a trade are full legal capacity and good character; for certain trades, the law also requires professional or other special qualifications.

However, a business license alone is not sufficient. A person may have a business identification number (IČO), issue invoices, and have a signed cooperation agreement, yet their actual activities may still meet the criteria for dependent employment.

This is becausethe Employment Act considers work with the characteristics of dependent employment performed by a natural person outside an employment relationship to be illegal work. Furthermore, starting in 2024, the law will explicitly stipulate that the duration of such work is not a relevant factor in assessing whether it is illegal. Therefore, one cannot rely, for example, on the argument that the collaboration lasted only a short time.

Similarly, there is no simple legal rule under which a collaboration would automatically be considered legitimate simply because, for example, the self-employed individual uses their own computer or has several clients. The law requires an assessment of the characteristics of dependent work, and case law emphasizes evaluating the actual nature of the relationship. Individual circumstances are important as indicators, not as universal, magic conditions.

The Difference Between an Employment Contract and a Collaboration Agreement

The fundamental difference between an employment contract and a collaboration agreement lies in the legal status of the person performing the work. The main differences lie in the following areas:

Simply put: an employer organizes an employee’s work, whereas with a truly independent contractor, the employer orders a service or the result of the contractor’s business activities. However, the line between the two isn’t always clear-cut in practice, which is precisely why it’s necessary to evaluate the nature of the collaboration comprehensively.

When Does a Collaboration Agreement Become a “Švarc System”?

The greatest legal risk associated with a contract with a self-employed person is the so-called “Švarc system” —a situation where the parties formally establish a business relationship, but the individual is in fact performing dependent work outside the scope of an employment relationship. The Employment Act considers such work to be illegal.

A typical red flag is when a contractor operates in a manner virtually indistinguishable from the company’s employees: they regularly report for shifts set by the company, their work is supervised daily by a manager, they act exclusively on behalf of the company, and they lack genuine business autonomy.

However, we do not recommend evaluating any single such characteristic in isolation. In its interpretation of dependent employment, the Supreme Administrative Court has emphasized personal or economic dependence and requires proof of statutory characteristics, particularly the personal and systematic performance of work on behalf of the employer, according to the employer’s instructions, and within a subordinate relationship.

Therefore, a mere clause in the contract stating that “the collaborator is not an employee” will not suffice during an inspection . What matters is how the relationship actually functions.

Fines for the “Švarc system” can reach millions

An improperly drafted collaboration agreement is not merely a theoretical problem. The Employment Act allows for a fine of up to 10,000,000 CZK to be imposed on a legal entity or self-employed individual who facilitates illegal work , with the statutory minimum fine for this offense set at 50,000 CZK. In serious cases, a suspension of business activities for up to two years may also be imposed, along with the publication of the decision on the offense on the official bulletin board of the State Labor Inspection Office for a period of one year.

Penalties also apply to individuals who perform illegal work. A natural person may be fined up to 100,000 CZK for performing illegal work.

Sample Collaboration Agreement: Why Simply Changing the Name and Price Isn’t Enough

If you enter “cooperation agreement template” into a search engine, you’ll find a wide range of free documents. While these can serve as inspiration for a basic outline, a generic template doesn’t take into account how your company actually operates.

A contract for a programmer typically needs to address details such as source code, copyrights, and the transfer of documentation. For a business consultant, protecting the customer database, commissions, and rules for acquiring business may be more important. For a marketing agency, you’ll need to address accounts in advertising platforms, access permissions, graphic assets, and rights to the content created.

Furthermore, a one-size-fits-all template may contain provisions that appear to give you a great deal of control over the contractor, but in doing so, they make the collaboration resemble an employment relationship. Therefore, when drafting a contract, we do not merely assess whether the text is formally valid. We also examine how the collaboration will actually unfold and whether the terms create unnecessary labor law risks. The legal distinction between self-employment and dependent employment is based on the actual characteristics of both activities.

Real-World Example: A Collaboration Agreement for an SEO Agency

Working with people isn’t easy. That’s why it’s unwise to underestimate the legal relationship with employees and collaborators. Maksym Kovryhin, the CEO of the SEO agency Topranker.cz, was well aware of this. He needed to draft a collaboration agreement that, above all, would protect his rights and his business.

“Since I prefer transparent collaboration, I needed the agreement to clearly outline the obligations and responsibilities of both parties and to be understandable even to a complete layperson,” explains Mr. Kovryhin.

First and foremost, we listened to the client. It’s important to understand exactly what he needs. We then drafted a collaboration agreement tailored specifically to his needs. Furthermore, it soon became apparent that the collaboration was not going as planned in one instance. We therefore advised the client on how to proceed in order to terminate the contractual relationship without risk or unnecessary costs, allowing him to focus on finding a new partner rather than on legal complexities.

We often encounter clients who draft their own contracts and then, in the event of a dispute similar to the one we handled for Mr. Kovryhin, are astonished at how much the failed collaboration will cost them. This can often amount to losses ranging from tens to hundreds of thousands of crowns.

“Dostupný Advokát fulfilled my request perfectly—together, we managed to draft a very solid contract relatively quickly that fully meets my expectations, and they even advised me to include a few additional provisions that I hadn’t considered before,” says Maksym Kovryhin, praising the collaboration.

He adds that, given his busy schedule and the demands of running a business, Dostupný Advokát’s offer appealed to him, primarily because of the ability to handle everything conveniently online (including payment), or by phone or Skype.

“Dostupný advokát is exactly what I was looking for—a team of young professionals who are a pleasure to work with. And the prices are half what I’ve encountered in the past. However, the affordable price in no way compromises the quality of service or the level of personalized client care,” concludes Mr. Kovryhin.

Summary

A collaboration agreement can be a very practical solution for long-term work with external contractors, self-employed individuals, and other companies. However, there is no single universal template that can be applied to every relationship. The agreement must be based on what work is actually being performed, who organizes it, who is responsible for the results, and the degree of autonomy the collaborator has.

When working with self-employed individuals, it is particularly important that the contractual documentation reflects reality. Even a perfectly drafted contract is of no help if the individual actually functions as a regular employee under the company’s day-to-day supervision. When assessing the “Švarc system,” the actual nature of the relationship is examined, and individual characteristics are evaluated in context.

Before signing a contract, therefore, make sure, in particular, that the scope of work and the method of assigning tasks are precisely described; that compensation and invoicing are clearly defined; that liability for defects and damages is established; that confidential information and intellectual property are protected; and, above all, that the terms for terminating the collaboration are specified.

A properly drafted contract is not only meant to help you avoid the “Švarc system.” Its main purpose is to prevent commercial disputes and provide both parties with a clear understanding of what they can expect from each other. If you establish these rules while the collaboration is still running smoothly, you’ll significantly reduce the risk of complications should circumstances change.