Joint Venture Lawyers
What is a Joint Venture?
A joint venture is a business relationship between two or more people or businesses (such as a corporation). This type of business relationship is formed when two or more people or businesses combine their efforts, ideas, or property for a single project or related series of transactions. A joint venture is usually formed by a contract between the agreeing parties. Joint ventures can range from a small activity to a huge, multi-million dollar project.
What Are the Characteristics of a Joint Venture?
A joint venture is similar to a partnership, but with a key difference. While a partnership concerns ongoing business in all regards, a joint venture only concerns a single project or a related series of transactions. Here are some other common characteristics of joint ventures:
- Profits and expenses - Unless otherwise agreed to, joint venturers share profits and losses equally
- Duration - Unless otherwise specified, a joint venture terminates upon the completion of the project or series of transactions
- Termination - Unlike a partnership, a joint venture does not terminate upon the death or incapacitation of one joint venturer. Additionally, a joint venturer does have the power to terminate the relationship at any time once the project or transaction is complete.
What Are Some Examples of a Joint Venture?
Joint ventures are formed in all kinds of business realms. Examples include:
- Private persons - Independent contractors can combine resources through a joint venture to get a major contract to build a housing development.
- Corporations - General Motors and Volvo Trucks formed a joint venture to build heavy-duty trucks. This is a joint venture instead of a partnership because the two companies conduct business separately except for this related series of transactions (manufacturing heavy-duty trucks).
What Are the Duties of Joint Venturers?
Parties in a joint venture have duties to one another. Such duties include:
- Fiduciary duty - A fiduciary duty means that each party has a duty to act in the best interests of all involved. Acting only for your personal best interests is a breach of fiduciary duty (which can also be a breach of contract if the joint venture was formed by a contract).
- Disclosure - All information regarding the joint venture shall be disclosed to the involved parties. This becomes an issue when certain trade secrets, patents, or other sensitive information is involved. Make sure the contract clearly specifies what information each party is required to disclose.
- Liability - If a third party is affected by the joint venture, all parties involved in the joint venture are equally liable. For example, a joint venture is formed to construct a building. During construction, a brick falls and injures a pedestrian. All joint venturers would be liable for the pedestrian’s injury.
What Are the Rights of Joint Venturers?
Parties in a joint venture have certain rights. These rights include:
- Equal control, influence, and power over the project or transaction. However, the contract can give one party complete control.
- Equal ownership of the project (and, thus, equal shares of profits and expenses).
How Can an Attorney Help Me?
Often, a joint venture is a contractual relationship. If you are planning to engage in a joint venture, an experienced attorney can draft and negotiate the contract to your liking. If you are already in a joint venture, an attorney can review the contract and inform you of your legal rights and duties. An experienced attorney can also help you solve a dispute if a joint venture goes sour.
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Last Modified: 12-19-2013 12:09 PM PST
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