Assets and Employees – whether each party will contribute assets, and whether they will assign employees to, or hire new employees for the venture.Financial Contributions – how much money each party will contribute to the venture.Confidentiality – an agreement for the parties to protect any trade and commercial secrets disclosed during the venture.Objective – the purpose and goals of the JV.Structure – whether the JV will be a separate business entity in its own right, or simply a short term project.More specifically, a JV agreement should specifically detail the following: Some JV agreements specify that the venture will automatically terminate if one of the members dies. The joint venture agreement should specify both the formation and termination dates, or that the venture terminates when its purpose has been accomplished. This amounts to a legal fiduciary duty to the venture, even if it becomes necessary for a party to place individual interests below those of the group. The agreement should be very specific in outlining each party’s duties and rights under the agreement, taking into account that all parties are entitled to share in the profits as well as the losses incurred in the venture.Įach party to a JV has a responsibility to act in “ good faith” in all matters regarding the venture, taking care to uphold the interests of all parties involved. In creating the agreement, the parties should state specifically the purpose and goal of the venture, as well as the venture’s limitations. This is referred as an “international joint venture.” What is Joint VentureĪ joint venture (“JV”) begins when the parties enter into a contract or “joint venture agreement,” the specifics of which are of crucial importance for avoiding problems later on. The foreign company then benefits from the domestic company’s governmental approval and business relationships in the industry. For example, a foreign company enters into a joint venture with a U.S. Additionally, joint ventures provide a way for companies to enter foreign markets. One party provides the product expertise, the other provides the means for production. For example, a tech firm may collaborate with a manufacturing company to bring a new high-tech idea to the marketplace. Parties enter into joint venture contracts in order to combine strengths and increase competitive advantage while minimizing risk.
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