You’ve built your business from the ground up, and now an exciting opportunity has landed on your doorstep—but it might be too big to handle alone. That’s where a joint venture agreement comes in.
Whether you’re eyeing a chance to partner with a larger company or you’ve found another small business whose strengths perfectly complement your own, a joint venture agreement works like a playbook for how you’ll share resources, divide responsibilities, and split both the rewards and risks of your partnership.
In this post, we share everything you need to about Joint Venture Agreements and how to use them effectively in your business
Table of Contents
What is a Joint Venture Agreement
A joint venture agreement is a legal contract between two or more parties who collaborate on a specific project or business activity while maintaining their separate identities. It outlines responsibilities, profit-sharing, management, and the terms for dissolving the venture. These agreements are typically used for temporary, mutually beneficial partnerships.
JVs can take various forms, from shared ownership and profits to joint management of the project. They are commonly used in industries like construction, technology, and research, where large investments or specialised knowledge are required.
Importantly, joint venture agreements outline the roles, responsibilities, and expectations of each party to ensure mutual benefit and minimise risks.
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Why do Joint Ventures exist?
Joint ventures exist to ensure the rights, interests, and obligations of parties are outlined in writing. Joint venture agreements exist as contracts to avoid creating a new legal entity or formal partnership between two parties but enable them to do business with each other.
Joint venture agreements usually exist when:
- Introducing your product to penetrate the market swiftly;
- Supplementing financials and support for your idea that is currently out of reach;
- Developing the product further before looking at licensing.
- Forming an alliance with a group or individual that has expertise in engineering or industrial design, who is basically able to finalise the product design and prototypes; or
- Expanding your knowledge on the market and potential distribution channel contacts, which can all be utilised for subsequent inventions.
Joint Venture vs Partnership Agreement: What’s the difference?
Joint ventures are created by legally binding agreements which are enforceable. Joint ventures are not a type of business structure and are purely referring to the dynamic two businesses have with one another. Joint ventures indicate that each party is responsible for its own actions and is liable for its share of the obligations it must fulfill under the venture agreement. Joint ventures usually have an end date and can exist on a short-term or long-term basis.
Partnerships drift away from this lack of formality that joint ventures offer. Partnerships refer to the business structure which is regulated on a state-by-state basis. Partnerships refer to the dynamic that exists between two parties that unite together in order to create a business.
Partnerships require partnership agreements as opposed to joint venture agreements. Partnerships don’t have an expiration date– they are fixed as they are used to govern the existence of the business.
Various forms of legislation, such as the Partnership Act (1892) and the Corporations Act (2001), are applicable and regulate the terms of a Partnership Agreement. Joint ventures can exist within partnerships, though, and it is important to ensure you are fully aware of the different agreements your entity is a part of.
What are the advantages and disadvantages of a Joint Venture compared to a Partnership Agreement?
With joint venture agreements come advantages and disadvantages. Below is a table that lists both:
| Advantages | Disadvantages |
| Greater flexibility in terms of tax.Liability for debts of joint ventures is stipulated to be separate.Partners are not bound to other partners. | Joint venture parties are able to avoid fiduciary duties.Joint ventures generally have fewer protections in case of dispute or dissolution. |
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F.A.Q.s
How do I make a Joint Venture Agreement?
Joint venture agreements are a type of contract which are legal documents and in response, require careful consideration when constructing them. It is highly recommended that you seek a lawyer who specialises in joint ventures or use a joint venture agreement template.
Conclusion
Starting a joint venture partnership can feel like a daunting task—you know where you want to go, but the path there needs to be crystal clear for both parties. While the opportunity ahead is exciting, getting the agreement right from the start is crucial to avoid misunderstandings or costly disputes down the road.
Lawpath’s joint venture agreement template helps you map out this journey confidently, making sure you’ve covered everything from day-to-day operations to exit strategies. It’s designed to give you and your potential partner the clarity and protection you need, so you can focus on what really matters: growing your businesses together. And if you need more clarity, you can also hire a lawyer to get a customised version.
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