Joint Ventures in Business

18 February 2022 in Business Law

A joint venture is a business arrangement where a group of individuals and or businesses agree to cooperate to complete a task or project they can virtually profit from. The collaborative and goal oriented nature of joint ventures can make them an enticing business arrangement in certain circumstances. Joint ventures are commonly used in the context of mining, property development and entertainment.

Joint Venture Agreements

Joint ventures can be established through a joint venture agreement which is a contract which outlines the rights and obligations of the parties to the agreement. These agreements also define the purpose of the joint venture and include other terms and conditions. Having a written joint venture agreement is an effective way for parties to clearly define their legal relationship and minimise the potential for future disputes. The highly experienced business and commercial lawyers at Brander Smith McKnight can assist you in negotiating, drafting, reviewing and amending joint venture agreements.

When is a Joint Venture Agreement appropriate?

Entering into a joint venture agreement may be an appropriate business strategy when parties have a shared and temporary goal, such as research and development. They can also be appropriate for parties who lack the resources necessary to achieve a business goal. Pooling the resources of multiple parties can make larger projects more achievable for smaller entities. Joint ventures are also an effective way to avoid entering partnerships or merging businesses by allowing two or more entities to work together on a temporary basis. They also allow parties to undertake projects together in a manner which is more cost effective than undertaking the project individually.

Incorporated and Unincorporated Joint Ventures

A joint venture may either be incorporated or unincorporated. An incorporate joint venture refers to an instance where a separate company is established to carry out business activity relating to the joint venture. An unincorporated joint venture refers to instances where a joint venture is established and governed by the relevant joint venture agreement.