Joint Venture Agreements
There are four different ways to structure a joint venture arrangement; a contractual arrangement, a partnership, a limited liability partnership and a corporate joint venture. These four vehicles come with increasing degrees of integration between the participants.
The Contractual Joint Venture Agreement is for use by two parties wishing to carry out a joint enterprise, where the parties do not want to go to the expense and formality of setting up a joint venture company. It is useful where the proposed project is finite in duration, for example, a joint marketing campaign, the redevelopment of a property, or product development.
Other possible routes for a joint venture include a general partnership and a limited liability.
The Contractual joint venture (or ‘Project’ as it is referred to in the Agreement) does not involve any legal pooling of the two parties’ assets, and no separate and distinct legal entity will be set up. The degree of integration between the joint venture parties is minimal compared to other legal forms of joint venture.
Because a contractual joint venture structure could be used in many different industries and situations, the Contractual Joint Venture Agreement is fairly-general, and does not go into detail about how the Project will be run. It simply provides for the appointment of a Management Committee, with one representative from each of the two parties, and then for the co-opting of one or two Project Managers to manage and run the Project on a day to day basis.
The Project itself will be defined and described and the parties’ roles set out. The framework of the project, including costs, will be detailed in a separate Business Plan, which can be updated by the Management Committee.
The Corporate Joint Venture Agreement can be applied by parties wishing to carry on a business and to participate in and operate that business as a joint venture company.
Businesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short-term projects. A successful joint venture can offer:
- access to new markets and distribution networks
- increased capacity
- sharing of risks and costs with a partner
- access to greater resources, including specialised staff, technology and finance
Joint ventures are especially popular with businesses in the transport and travel industries that operate in different countries. An optional international element is included in this Corporate Joint Venture Agreement.
Our Corporate Joint Venture Agreement Includes Draft Articles of Association at which are a modified version of the model Articles of Association of a private company under the Companies Act 2006.