The agreement that was avoided

Since 2023, we have been assisting a leading European yacht equipment manufacturer in negotiating a contract with one of the largest yacht manufacturers. The yacht manufacturer presented their standard cooperation agreement, which we worked on collaboratively with our client.

Cooperation agreements are generally highly sought after in the industry. They provide a framework for collaboration and establish its terms. The goal of such agreements is to create a model that ensures a secure relationship for both parties.

In this case, the yacht manufacturer proposed terms that seemed to enhance our client’s business stability. The agreement outlined long-term cooperation and extended after-sales service.

However, a closer analysis revealed significant flaws in the proposed agreement. Most notably, it did not grant our client exclusivity in any territory. Moreover, the fixed pricing, initially seen as a benefit, posed a disadvantage when considering fluctuations in the yacht equipment market. Finally, the agreement deviated from standard practices concerning product liability, significantly increasing the risk on our client’s side.

Our thorough analysis of the agreement focused not only on legal aspects but also (and perhaps most importantly in this case) on business considerations. A good agreement should benefit both parties. It may impose certain restrictions, but it must also offer something in return. Unfortunately, this was not the case here.

Thanks to the collaboration with our law firm, the company avoided signing an agreement that was ultimately unnecessary. Ongoing advice allowed our client to achieve results by developing internal documents that provided far better protection.

As a result of our contract analysis:

• the company implemented documentation that allows it to operate safely without entering into contracts with individual counterparties,
• it avoided signing an agreement that offered little benefit,
• it received advice on product liability issues.

Supporting entities in the yacht industry is our specialty. With our experience, we can analyze our clients’ situations not only from a legal perspective but also through the lens of their business operations.