A Joint Venture Agreement is a document that sets out a type of partnership agreement put together for some specific purpose. The agreement spreads the risk attached to the project among the various parties to the agreement as well as details the sharing in any of its success and profits. It also sets out the benefits as well as the risks to the agreement for each of the participating parties.
The joint venture agreement gives an element of control to the project since it establishes the extent of the agreed to actions as well as setting the executive protocols for the smooth functioning and efficient operations of the business venture. In addition, the agreement bears in mind each party’s best intentions for achieving the general business goals.
Usually, such an arrangement will be made and entered into on a specified date between the parties to the agreement. It shall set out the business purpose of the agreement as well as define the terms of the agreement which may specify the aforementioned starting date and shall continue till terminated, dissolved by law or ended by other stated provisions. The joint venture agreement may further define the terms as they are used in the agreement.
The obligations of the parties involved shall name who will be responsible for all of the decisions and operations of the business as well as compensating them for services rendered. It shall also state how the profits and losses shall be allocated at the end of each fiscal year.
The agreement shall also name the business participating in the joint venture that will have complete, total and special authority to manage and control the business for the purposes as stated in the agreement. Affiliates of the arrangement may take part in rendering services on behalf of the joint venture. Also, parties to the agreement as well as affiliates may have interests in businesses that do not form a part of the relationship. The joint venture agreement shall also specify the persons or persons who shall pay the expenses of the partnership.
Each of the parties to the agreement shall be indemnified by the other for losses, judgments, liabilities, expenses as well as for amounts paid as settlement of claims sustained by the partnership. In case any of the parties suffers a loss but this is not due to neglect or bad faith and that the course of action taken was in the best interests of the joint venture, then none of the parties will be liable to pay the other for such losses incurred. The arrangement may be dissolved in any of the following instances:
- Bankruptcy, withdrawal removal or insolvency of either party
- Through sale or other disposition of all or most of the significant assets
- Mutually agreed to by the parties to the agreement
Furthermore, the joint venture shall keep adequate books and records of its place of business giving a true and accurate picture of the business transactions. In case any of the provisions of the agreement shall become invalid it would not affect the remaining provisions of the agreement. All notices that are required should be in writing and will be deemed to have been given when deposited in the postal mail or through certified mail or be addressed to the rightful address of the parties to the agreement.
By using pre-defined joint venture agreement forms to enter into a project there are not only substantial savings in time but also completeness is offered in these documents which can be tailor-made to suit individual needs. In addition, the language and attributes of these documents adequately meets the necessary specifications of a legally binding document.