What is a Joint Venture (JV) Agreement?
A Joint Venture (JV) Agreement is a contract between at least two business entities or individuals entering into a temporary business relationship. By joining forces, the parties hope to achieve a mutual goal.
For example, with this business relationship, each party can:
- Grow without needing outside funding
- Fund the growth of another business
- Gain access to wider markets
- Share resources
- Develop products
- Diversify
A Joint Venture Agreement sets out the terms and obligations of the members and their shared goal. A contract is valuable because each party shares in the risk and reward, and they can minimize disputes by documenting their agreement.
What are the different types of joint ventures?
You can use LawDepot’s Joint Venture Agreement template to create either a contractual joint venture or a general partnership.
Contractual Joint Venture
A contractual joint venture is when two separate businesses sign an agreement that outlines their common purpose and how they’ll work together.
Although they have a common goal, the parties operate separately and don’t pool profits or losses. Each party keeps its accounting records separate and there are no registration requirements.
General Partnership
A joint venture in the form of a general partnership is when the partners agree to share in the profits and losses from the project. Each party is jointly and severally liable for the obligations of the partnership.
This type of joint venture is popular with real estate ventures (e.g., between a land owner and a developer).
Keep in mind that a joint venture is typically limited in scope and time. The relationship ends once the parties achieve their goal (or once the contract end date passes). Use a Partnership Agreement to create a contract that continues for as long as you want to be in business.