Legal arrangement
A (pure) development agreement is not a special agreement within the meaning of Book 7 of the Dutch Civil Code and Book 7A of the Dutch Civil Code. Contrary to special agreements such as an agency contract, an employment contract, a settlement agreement, a building contract, a rental agreement, etc., there is no legal regulation for a development agreement. Development agreements are therefore in principle free of form (no specific rules apply), unless, for example, they can be qualified as an assignment agreement (in which a party gives instructions to carry out the development activities). This therefore offers a great opportunity for contracting parties to lay down their mutual agreements, but also entails risks because matters not covered by a development agreement are not covered by a statutory regulation.
What do you arrange in a development agreement?
In development contracts you arrange, among other things, which activities will be carried out by which party, usually linked to a planning and milestones. You also lay down which basic knowledge (also referred to as background information or background) is brought in by each of the parties under the joint development agreement and how this may be used by the other party within, but possibly also outside, the development project in question. In addition, it is important to determine which of the parties becomes the owner of the knowledge (also referred to as background or foreground) developed in the development project (whether or not jointly). This can be arranged in different ways in a development agreement (for example, each of the parties may become the owner of foreground developed by it, the parties may jointly become the owner of foreground, or ownership may be allocated to particular territories/markets in which the different parties are active). Appropriate agreements on the ownership and use of background and foreground are often at the heart of a sound development agreement.
Development agreement for (grant) projects
A joint development agreement is also often linked to a grant or project plan and in that case, the content of such a joint development agreement must be tailored to the relevant grant conditions and the relevant development agreement must also be submitted to the grant authority. Therefore, when drawing up development contracts, the requirements set by the grant authority must be taken into account in advance. If you conclude a development agreement with a knowledge institute, you must also take account of possible unlawful state aid when making agreements in a development agreement on the use of the knowledge institute's background and foreground.
Termination of a development agreement
Depending on the form, content and circumstances, a development agreement can be terminated in a number of ways: by expiry of the term of the development agreement, termination, dissolution, nullification, reliance on nullity and by mutual consent. Some of these termination options may be contractually excluded in the development agreement. On the other hand, a development agreement can usually be terminated on the basis of case law after a reasonable period of time (otherwise it would remain in force indefinitely), even if no provision has been made for termination.
Need help with a Development Agreement?
If you are going to develop something together with another party and would like support in drawing up and negotiating a workable and legally clear development agreement, or in the event of disputes about or termination of a development agreement, please contact us, free of further obligations.