Joint venture termination, or dissolution of joint venture, is the process in which a joint venture is ended.  Termination of a joint venture can happen for a number of reasons.  Some of the more common situations in which a joint venture operation can be terminated include:

  • According to an agreement by all parties to the joint venture (often pre-determined as a provision within the original joint venture contract)
  • The joint venture is no longer profitable or practicable to continue
  • If a joint venture member has become deceased or incapacitated, and there is no other person or party to substitute for them

Also, if the joint venture was created to fulfill a specific purpose (such as meeting a sales goal), then the joint venture may terminate upon completion of the purpose.  Or, if it is no longer practicable to pursue the purpose, the joint venture may terminate at the point when it becomes impracticable to continue operations.

How Can the Parties Terminate the Venture?

If the parties to a joint venture desire to terminate the venture, there are several requirements to be followed in order to make the termination legal.  While these specific requirements may vary slightly by jurisdiction, they usually include:

  • There must be a definite intention that the joint venture operation be terminated;
  • This intention must be clearly communicated to all parties to the joint venture contract, either through words or unequivocal (clear) acts;
  • Notice of termination must usually be served to all parties

What is Judicial Dissolution of a Joint Venture?

In some cases, termination or dissolution of a joint venture can come about not by the agreement of the parties, but by order of a court.  According to various laws, courts may grant judicial dissolution based on different grounds, including:

  • The existence of dissension and disharmony among the joint venture parties;
  • A joint venture member has been shown to be of “unsound mind”;
  • The joint venture operations can only be continued at a loss of profit;
  • One of the members has consistently or willfully commits a breach of the venture contract terms;
  • One or more joint venture members have been found guilty of conduct that can be considered “prejudicial” to the business;
  • Any other circumstance that might require dissolution, according to the court’s discretion

Thus, judicial dissolution may be ordered even if the joint venture members don’t agree with the decision, or are not yet ready to end the operations.  This is why it’s important for the parties to cooperate with one another and to have an understanding of joint venture termination laws.   

Do I Need a Lawyer for Help With Joint Venture Termination Laws?

Joint ventures can often be major, complex business enterprises.  Because they may involve several different parties, even smaller joint venture projects will require the assistance of a qualified business lawyer.  If you need assistance with joint venture laws, especially those governing termination and dissolution, it’s in your best interests to hire an experienced business attorney.  Your lawyer can help review the joint venture agreement, and can represent you in court during the proceedings.