Joint Venture Agreement is a written understanding of terms and conditions between the parties. It sets out the terms as well as the obligations of the members and joint venture. Let’s know more about this in this article and on Joint Venture Agreement Format.
What is Joint Venture?
It is an arrangement wherein two or more parties come together or join each other to carry on a particular business or project. A joint venture can be useful for the small as well for large businesses. A JOINT VENTURE business facilitates with an option to establish a short-term or single-purpose business or if successful the same can be turned in to a Corporate entity alike Company, LLP.
Some of the frequently asked questions on Joint Venture Agreement
Who Can Be The Party?
Can a Joint Venture be created as a separate entity?
Yes, often the joint venture creates a separate business entity and the new entity may be a Company, a Partnership or a Limited liability Partnership.
Is the Joint venture or Partnership similar?
The Joint Venture and partnership may have some similarities but they are not common.
What is the Purpose of Joint Venture?
Parties enter into joint venture agreements on demand to pool assets, strength and increase competitive advantage while minimizing risk.
It is one of the easiest ways to enter a foreign market.
Constitution of a Joint Venture
A joint venture (“JV”) commences when the parties come into a contract or an agreement called, “Joint Venture Agreement”.
What is the Duration of Joint Venture?
Joint Venture may be created for a specific time period or for a specific project.
Download Joint Venture Agreement Format
You can also download Joint Venture Agreement Format in the PDF formats.
Elements of Joint Venture Agreement and what should be included in the Joint Venture Agreement Format
It should specifically contain detail on the following:-
Definitions of different terms used in the Agreement, like Venture, Project, Internal Revenue Code, Net profit and Net Losses etc.
Formation: Date of Execution from when the joint venture will come into
Name of the venture with which it will carry on the business.
Principal place of business where the business will be carried on.
Purpose of the Joint Venture, for which it is been constituted.
Duration: the term when the venture shall commence and when it shall be terminated or dissolved.
Percentage of Participation specifics of how any profits and losses are to be distributed or shared among the parties, as well as the assignment of liabilities.
Management: how the business shall be managed.
Resolution of Disputes: instructions for resolutions of disputes if arises between the parties.
Exit Strategy: complete details on how and when the Joint Venture will end and thereafter how the assets and liabilities will be distributed among the Parties to a joint venture.
Confidentiality: Under this Agreement, the parties may have access to information that is confidential in nature. Such information may include, but not be limited to work product, facts or statistics, ideas, materials, business plans, technical information, methodologies, or any other shared data Intellectual Property a complete disclosure for the protection of IPR developed or involved by the joint venture and therefore the further use, reuse, reproduce, alter, modify and all other rights related to this.
Marketing and manufacturing transparent policy a complete disclosure for manufacturing the article and for the marketing of the project.
Indemnities: to indemnify each other in case of loss or harm.
Return on Capital Contributions: the percentage of return of each party on the capital they have contributed.
Accounts and auditing: how the books shall be prepared and the method of accounting to be adopted.
Insurance Coverage: The insurance providers will state as to which party will be responsible for taking out insurance and what type of insurance coverage has to be taken. That the company/hirer shall ensure the machinery against fire in a recognized fire insurance office in the sum of Rs. (In words and Number) and shall if required produce to all the parties to this agreement the relevant receipts and documents for his or its inspection the policy of insurance and the receipts of the premiums paid (and the hirer shall on demand repay to the company).
Limitation of relationship: Nothing contained in this Agreement shall be construed to create the relationship of employer and employee between ABC and XYZ.
Address for notice: All notices to, contact with, or any provision of information relevant or pertaining to this Agreement shall be directed to the A&X Pvt. Ltd. as follows:
Audit Period: to be conducted by whom and a copy of the report to be distributed to each party.
Force majeure: Another very important provision witnessed in modern commercial contracts relates to force major or excuses for non-performance. This provision defines as to what particular circumstances or events beyond the control of the seller would entitle him to delay or refuse the performance of the contract, without incurring liability for damage. It is usual to grade the exact situations or events, like a strike, lockout, riot, civil commotion, Government prohibition, etc. which would provide an excuse to the parties to delay or refuse the performance. It may be further provided that events of a similar nature which are beyond the control of the parties and which could not have been avoided with due diligence would also furnish the above relief. (An act was done by God) in case of any natural calamity how the loss shall be a bared.
Severability: Any portion, provision, illustration or warranty of this Agreement which is banned or which is held to be void or unenforceable shall be unproductive/useless to the extent of such prohibition or unenforceability without nullifying/cancellation of the remaining provisions hereof. Any part, provision, representation or warranty of this Agreement which is prohibited or unenforceable or is held to be void or unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan shall not invalidate or render unenforceable such.
Policy committee different committees to be constituted.
A Joint Venture Agreement format should contain all the above mentioned elements.
A joint venture agreement fulfils various objectives and benefits by improving clarity, guarding the parties and acts as evidence. The agreement also allows the parties to retain their legal identity. Please find the attachment of Joint Venture Agreement format.
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on criminal and corporate law. He is a creative thinker and has a great interest in exploring legal subjects.