The modern development of business, driven by significant advancements in science and
technology, requires increasingly complex and specialized operations, demanding important
levels of professional ability. Consequently, in many key sectors of the economy, it is no
longer possible for a single company to independently address the challenges involved in
conducting certain projects.
Examples include construction contracts for mining plants or their expansion, port and
airport developments, complex international trade operations, among many others.
Due to the necessary specialization of companies aiming to offer high-level technical
products and services, opportunities arise to enter into cooperation agreements with other
companies. Each participant in such an association fulfills a specific role, requiring mutual
cooperation and understanding.
These agreements also need a clear definition of each party’s roles and responsibilities, as
well as a general framework for management and coordination.
PERFORMANCE EQUIVALENCE
In such cooperation agreements, the rights and obligations of each party are defined. Each
company undertakes to provide a specific contribution—this may involve the execution of a
task, the supply of machinery, the construction of infrastructure, or the provision of financial
resources. In return, each party expects to receive a share of the business profits.
The legal regime governing these agreements is based on the principle known as
performance equivalence. This means that each party’s role or task must be considered
equivalent in value to that of the other party. Consequently, the benefits each associate
receives should be proportional to their respective contributions.
Precisely defining these contractual balances presents significant challenges, as it is natural
for each party to view its own contribution more favorably and to undervalue the other’s.
Furthermore, in most cases, an interdisciplinary approach is needed, considering that
professionals from various fields—such as mining, construction, transportation systems, and
others—are often involved.
PERFORMANCE OVER TIME
Many of these contracts require an extended performance period, sometimes spanning
several years. One may think of the construction or expansion of a mining plant, a road
system, a port, or an airport.
Throughout the entire performance period, the parties must keep general-level
coordination to ensure the continuous preservation of contractual balance. It is common for
long-term projects to experience a disruption of the aforementioned performance
equivalence.
Such disruptions may occur, for instance, when project executives make unauthorized
changes, issue change orders, or adopt personal interpretations or decisions, leading to
significant alterations to the essence of the contract and its terms and conditions. They may
also result from agreed contractual modifications due to new interpretations of the core
agreement, increased costs, or unforeseen circumstances.
As a result, one party’s original expectations for entering the business relationship may no
longer be met, making continued participation unduly burdensome.
DISPUTES
The scenarios just described can give rise to disputes that significantly increase the overall
cost of the business and may require several years of litigation to resolve.
In light of the above, it is prudent and advisable for parties entering into such business
cooperation consortia to engage professional advisory and support services from the very
outset. Such services should involve various disciplines, including engineering, architecture,
legal services, and related areas—with the express goal of defining and adjusting, at every
stage, each party’s rights, and obligations under the performance equivalence principle.
This will help keep contractual balance, ensure the orderly and efficient development of
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