Joint Venture Agreements

A joint venture is when two or more individuals or entities get together specifically for a project rather than a long-term continuing business with a view to making and sharing the profit or loss in accordance with the joint venture agreement.

A joint venture can be undertaken by way of partnership, company or trust (see Business Structures) or any other arrangement governed by the joint venture agreement. Joint venture allows the parties to pool their resources and expertise for the project. In a joint venture, the individual or entity may contribute money, skill or other asset such as property.

It is therefore important to ensure that the joint venture agreement is drafted in as much detail as possible covering all aspects of the relationship between the parties including the joint venture project.

Typically,the joint venture agreement should cover:

>> The reasons and objectives for the joint venture and the scope and terms including conditions under which the joint venture will operate

>> The activities of the joint venture in achieving the objectives and the joint venture parties to be prohibited from engaging in those activities in competition with the joint venture

>> Details of the parties to the joint venture, the percentage of interest each joint venture party has in the joint venture and how dealings between the joint venture and any joint venture party are to be transacted

>> The contribution each joint venture party is to make to the joint venture, whether cash or kind, including with respect to set-up costs, on-going costs, how the contribution is to be transferred to the joint venture and who retains ownership of any real property

>> What the roles, responsibilities and obligations of the joint venture parties including meetings and decision making and how new parties are to be introduced to the joint venture

>> Reimbursement of expenses to and distribution of profit or loss amongst the joint venture parties

It is important for the parties to discuss and agree to the above (the list not being exhaustive) before instructing solicitors to draft a joint venture agreement.It is important that you seek proper legal advice so please call LAC Lawyers Pty. Ltd.to assist you.

If you are interested to know something more on Joint Venture Agreements and other details,you are welcome to the Commercial Law site.