Joint Venture Agreement What Is It

For your joint venture to be successful, the joint venture agreement that governs all transactions must be clear and concise. All project participants must be 100% sure of their rights, duties and obligations. There are several advantages to being in a joint venture. With regard to resource sharing, companies may consider, particularly in the 50/50 joint ventures, the introduction of deadlock rules so that, if the parties fail to agree on fundamental issues, a procedure allows a party to buy or be bought by the deadlocked parties. It is important to get advice from a professional consultant to ensure that your joint venture is created in the best way possible to avoid taxes and maximize profits. In the United Kingdom, India and many common law countries, a joint venture (or a company incorporated by a group of individuals) must submit the Memorandum of Understanding to the appropriate authority. It is a legal document that informs the public of its existence. It can be consulted by the public at the place where it is deposited. A sample can be seen on wikimedia.org. [4] With the statutes, it constitutes the “constitution” of a company in these countries.

To prevent conflicts from being unchecked and threatening the entire project, a well-developed dispute resolution process within your joint venture is essential. There should be clear guidance on how to take the first steps when a dispute develops, as well as arbitration and mediation clauses, and whether compensation can be invoked if the dispute causes prejudice to the party. Joint ventures are risky forms of business partnerships. The economic and management literature has paid attention to various factors of conflict and opportunism in joint ventures, in particular the influence of the control structure of mothers,[9] of change of ownership and the volatile environment. [10] More broadly, joint ventures contain a “hidden face” related to potential negative consequences, unethical behaviour and ill-intentioned organizations. [11] ยท Open exchange of all information is essential, especially with regard to finance.