Joint Venture Contracts
What are Joint Venture Contracts?
Joint venture contracts are agreements between two or more parties, in order to accomplish a specific business operation together. In a joint venture, the parties agree to share in the gains and losses of the business enterprise. An example of this is where to product manufacturers join efforts to sell their products in a single package.
A contract is needed in order to create a joint venture, since joint ventures must be entered into voluntarily. All parties need to agree to the joint venture terms, and must express their intent to enter into the specific business relationship.
What is Usually Contained in a Joint Venture Contract?
In order for a joint venture to exist legally, the following requirements must be addressed:
- A common interest shared by all the parties;
- Rights of all members to govern and direct policies’
- Rights to control and manage property that will be used during the venture;
- Fiduciary duties: Sharing of profits and losses by all parties
Thus, a joint venture contract will usually address the items listed above in detail. In addition, the joint venture contract should list the names and contact information of all the parties involved.
Additional clauses and contract provisions may also be added depending on the needs of the parties. For example, the parties may wish to include a clause stating how legal disputes should be handled (i.e., whether the parties should undergo mediation or file a lawsuit). Legal liability for misconduct during the venture may also be addressed.
Do Joint Venture Contracts Need To Be In Writing?
By law, joint ventures must be formed by contract, but not all jurisdictions require the contract to be in writing. Some jurisdictions will find a joint venture even for implied contracts (either implied from oral agreements or by the actions of the parties).
However, since even small business ventures can be complicated, it is highly advisable that the parties use a written contract any time they wish to enter into a joint venture. Having a written contract definitely has its advantages- the parties can have a written record of the contract terms, which makes the agreement much clearer for everyone involved. Also, in the event of a lawsuit, the written contract can be used as evidence during the course of trial.
Lastly, like any other contract, joint venture contracts are subject to requirements of the statute of frauds (i.e., certain contracts need to be in writing, such as when the contract deals with the sale of land).
Should I Hire a Lawyer for Assistance With Joint Venture Contracts?
Joint venture contracts are an essential, necessary part of any joint venture; they are required by law. If you plan on entering in a joint venture, you may wish to hire a lawyer to help you in drafting and reviewing the joint venture contract. Also, if a legal dispute arises over the joint venture contract terms, your lawyer can help you file a lawsuit in a court of law.
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Last Modified: 08-22-2012 03:15 PM PDT
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