Joint Venture Agreements
Joint Venture Agreements
Joint ventures are an increasingly important way in which businesses undertake significant business activities and projects.
The reasons why individual businesses may wish to enter into a joint venture will vary from case to case. However, whatever the reasons, a joint venture inevitably involves a sacrifice of the control and flexibility which the individual business might otherwise have enjoyed had it undertaken a business or project independently. It is, therefore, a key requirement of any joint venture that the legal issues are addressed at an early stage. A carefully drafted joint venture agreement is the first step in this process.
A joint venture agreement is a document setting out how two parties, whether individuals or businesses, intend to work together. The contents of your joint venture agreement will depend on what you are trying to do. You may decide to co-operate on a one-off basis, for a particular project, or for a limited period such as a year. Alternatively, you and your partner may decide to set up a separate joint venture business, owned by both parties. Before you decide, you should seek specialist legal advice as to the best option and to ensure that any agreement you draw up is legally sound.
You should both be clear about the nature of your agreement, and satisfied that it is fair to both parties. The agreement should set out in detail what each party will contribute, and what you are trying to achieve
A written agreement should cover:
- the structure of the joint venture, eg whether it will be a separate business in its own right
- the objectives of the joint venture
- the financial contributions you will each make
- whether you will transfer any assets or employees to the joint venture
- ownership of intellectual property created by the joint venture
- management and control, eg respective responsibilities and processes to be followed
- how liabilities, profits and losses are shared
- how any disputes between the partners will be resolved
- an exit strategy
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