Joint Venture Agreements
Business & Commercial
Joint Venture Agreements in Newcastle NSW
A Joint Venture takes place when two or more individuals or entities plan to undertake a project and mutually share the profit or loss. A joint venture agreement is a legal agreement to formalise the understanding of the relationship between the parties.
A well-drafted joint venture agreement sets out all the terms and conditions between the parties, including what each party will contribute; timeframes and milestones; the management of the joint venture, cost and profit sharing, liability, and dispute resolution avenues. As well as operative terms and conditions, there are essential attributes that Joint Venture Agreements must possess, including the Capital Contribution Clause; the Profit and Loss Clause; the Rights and Obligations Clause and the Deadlock Clause etc.
Burgess Thomson can assist you the early planning and negotiations with your joint venture partner, drafting a formal joint venture agreement, or aiding with dispute resolution.
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Frequently asked questions
What are the types of Joint Venture Agreements?
There are three types of Joint Venture Agreements:
- Contractual Joint Venture – in this arrangement, the terms, obligations, and liabilities of the parties are set in a written instrument signed by both the parties.
- Corporate Joint Venture – in this arrangement, the obligations, terms, and liabilities are set forth in a written agreement, however, the agreement is more extensive and intends to make the incorporation of Joint Venture as a separate legal entity.
- Unit Trust Joint Venture – in this arrangement, a Unit Trust is established to combine some of the features of a Contractual Joint Venture with those of a corporate one.
What are the advantages of a Joint Venture?
The advantages of a joint venture include:
- Both parties are incentivised to work hard and succeed
- Both parties are contributing resources and skills, and share the time, costs, and risks of the project
- The relationship property is restricted to a specific project and is easier to define and act on than a general long-term business relationship property
What are the disadvantages of a Joint Venture?
The disadvantages of a joint venture include:
- There may be a misunderstanding about what resources each party will contribute
- There may be a disagreement on the speed of work and time frame of the project
- Each party may not have legal rights to what is developed
- Disagreements between parties may result in a costly legal dispute
