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Joint venture agreements, also called JV agreements, are contractual consortiums of two parties.
They usually seek to join both party’s resources to achieve a specific objective. The party’s benefit by
receiving proportionately split profits and distributed ventures.
Type 1. Contractual
Contractual joint ventures exist solely through a written contract. In contrast, a separate legal entity
is formed through a corporation or limited liability company (LLC). You must put your joint venture
agreement in writing to protect your rights if a dispute arises.
Joint venture agreements are accommodating and can be drafted to merge companies of any size on
specific projects. Doing so allows targeted outputs to be delivered more efficiently and effectively.
The contract ensures that all parties understand their rights, responsibilities, and limitations.
Although JV agreements are similar to a partnership agreement , there are still several differences. A
joint venture agreement is used in the commission for a single activity for a specified period.
Partnership agreements indicate an ongoing, long-term relationship.
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The most essential element of a joint venture agreement is evaluating if the chosen partner is right
for your company. Ask yourself if the relationship truly strengthens your market position. After
deciding on the right partnership, move the relationship forward by drafting a joint venture
agreement that includes specific provisions.
Below, we’ve outlined a checklist of the 10 key elements of a joint venture agreement:
Business address
Dissolution terms
While the list referenced above is a great start, you may need to include other provisions within your
agreement. Business lawyers can learn more about your business relationship and draft a joint
venture agreement that satisfies both party’s needs. This strategy will ensure you avoid making legal
mistakes that haunt you in the future.
Well-known companies and small businesses alike engage in joint ventures. It’s a great way to
achieve synergies that either entity would not be able to accomplish without each other.
Construction
Joint ventures for construction companies allow both parties to maximize their earnings and
outputs. Types of joint ventures in construction companies include:
Automotive
Automotive joint ventures are emerging through technology in today’s market. Types of joint
ventures in automotive companies include:
Technology
Joint ventures for technology companies are perfect since they allow for maximum flexibility. Types
of joint ventures in technology companies include:
Retailers
Joint ventures for retailers can be a smart and fun way to revitalize the consumer shopping
experience. Examples of high-profile retailers engaging in joint ventures include:
Married Couples
Qualified joint ventures are created specifically for married couples. They can achieve special tax
considerations and efficiencies by using this structure type. Moreover, a qualified joint venture
allows both spouses to receive social security and Medicare credit for the tax year.
For married couples to receive tax benefits under the qualified joint venture classification, then the
relationship must meet the following elements:
Joint venture agreement samples allow you to anticipate what the agreement may include.
However, no two business situations are alike, which means that the terms contained in a sample
may not apply to your situation.
The above-referenced set of joint venture agreement samples are perfect for reviewing since they
are used by government entities. They apply to other business situations instead of your specific
goals, which means hiring business lawyers to draft an original agreement for your project is the
most practical approach.
Joint ventures are usually taxed as partnership business entities, corporations, or LLC. If the joint
venture is taxed as a corporation business formation, it’s subject to double taxation on corporate
and shareholder profits.
In contrast to partnership agreements, joint ventures aren’t recognized by the IRS as a taxable
entity. As such, your joint venture agreement establishes how taxes are paid.
You must also consider the taxation of profits and account for them correctly. Depending upon the
type of deal you are facilitating, this usually straightforward process can quickly become challenging.
Getting help with a joint-venture agreement starts by speaking with business lawyers. They can
provide you with the legal help you need to draft and execute the perfect document while avoiding
common and not-so-common legal mistakes. A business attorney can also offer more complex
services include contract negotiations and revisions on your behalf.
It’s helpful to organize a dossier of essential documents surrounding the joint venture. Some items
to bring to your initial consultation include:
Business lawyers are experienced in translating it into the best joint venture agreement for your
specific situation based on the information provided. Even if you already have a contract in hand,
your attorney can conduct a simple or complex review that ensures the agreement is legal and fair.