What do you need in a joint venture agreement?
Published 09 Apr 2019
Occasionally, you might find that your interests align with another business's and that you can help each other achieve a common aim. Working on a project with another company allows you to complement each other, with respective parties bringing necessary skills to the table that the other may lack.
Embarking on a business venture with another organisation brings with it exciting possibilities. However, to help it succeed, rather than turn into a nightmare, it's important that you create a joint venture agreement.
What is a joint venture agreement?
Before beginning work with another business on a mutual project, you want to ensure each parties' rights and obligations in relationship to it are clearly laid out and agreed upon. A joint venture agreement does just this. It clarifies:
- Who contributes what to the project.
- How you and the other party will make decisions relating to the venture.
Basically, a joint venture agreement should define the foundations of the relationship, and cover how it should proceed in various vital scenarios that could arise.
What essentials do you need in a joint venture agreement?
You want your joint venture to cover as many possibilities as possible. This way you and the other party are aware of how to proceed and have agreed on the actions beforehand. By doing this, you minimise the potential of future conflict.
Every joint venture agreement may have its own specialised needs that it has to address, however, in general it's important that you cover the following issues.
- Timeframes and associated achievements - Having an agreed upon schedule helps keep the project progressing, rather than stagnating at a certain stage.
- How you'll resolve disagreements - Creating a set process in the case of a dispute helps you find a solution to the problem faster, with less animosity.
- Nature and management of the relationship - Make sure you're clear on how you'll work together, whether you're equals in the venture or if one party has more sway than the other.
- Termination of the relationship - When does the venture officially end? You also want to lay out what happens if one party wishes to exit the joint venture, and the different methods of doing so.
- Intellectual property - Consider both prior and developed intellectual property and how it's managed. You need to decide who will own any intellectual property that is created during the venture, as well as the licenses needed to allow you to use it for the project.
- Cost and profit sharing - Additionally, you need to discuss how you'll share risks and liabilities as well as the benefits that come out of the venture.
If you're entering into a joint venture, make sure you reach out to the expert team at Malouf Solicitors. They can assist you in creating a thorough joint venture agreement that will help your project progress smoothly.
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