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Home Business Joint Venture Agreement

Joint Venture Agreement Template

Use our Joint Venture Agreement to create a contract between parties who want to do business together.

Updated July 27, 2023 | Legally reviewed by Brooke Davis

A Joint Venture Agreement is a contract between two businesses or individuals who agree to work together to achieve a specific goal.

A completed Joint Venture template should include details such as venture members, member responsibilities, and venture goals, as well as the start and end date.

Table of Contents
  • What is a Joint Venture Agreement?
  • Why Start a Joint Venture?
  • The Risks and Advantages of Forming a Joint Venture
  • Joint Venture Agreement vs. Partnership
  • Joint Venture Agreement Sample

What is a Joint Venture Agreement?

A joint venture agreement is a contract between two or more parties who want to do business together for some time.

Instead of creating a formal partnership or new legal entity, a contractual joint venture (“JV”) allows the parties to continue filing their tax returns separately yet still reap the financial advantages of a partnership, such as sharing resources and risks.

A joint venture agreement will identify the following fundamental elements:

  • Parties or Co-Venturers: the two entities that have agreed to work together.
  • Contributions: how much money, property, or time each co-venturers will invest.
  • Management: the person responsible for the day-to-day operations of the venture.
  • Purpose: scope of JV activities and reason to join resources and collaborate.
  • Profits: how profits will be distributed based on contributions or another formula.
  • Term: whether the venture is for a limited time or indefinite period.

Here are some other valuable details a joint venture agreement might include:

  • Assignment: neither party may assign the venture
  • Confidentiality: both parties agree to keep all proprietary information confidential
  • Exclusivity: neither party is required to do business only with the other co-venturer
  • Termination: the venture will end when a goal is accomplished or by a specific time

As a reference, people often refer to this document by other names:

  • Consortium Agreement
  • Cooperative Agreement
  • Co-Venture Agreement
  • Joint Undertaking
  • JV Agreement
  • Strategic Alliance

Joint ventures have a limited life and purpose, requiring less commitment than a more permanent type of partnership that imposes more responsibilities and obligations on each partner.

Why Start a Joint Venture?

If your business could benefit from sharing resources with another company, a joint venture for a limited period and limited purpose may increase your chances of succeeding. Companies often enter into JV Agreements in the following circumstances:

  • Create strategic alliances to gain access to broader markets
  • Develop new technologies, products, or services
  • Expand business development through new networks
  • Leverage one company’s brand and reputation to increase sales
  • Lower research and development costs through collaboration
  • Share expertise or relationships to penetrate new markets

Because most co-ventures in the United States are formed as LLCs, you’ll likely need to understand how to create an LLC.

Unlike a formally organized partnership, co-ventures are not permanent and are often dissolved in these kinds of situations:

  • One company buys the other business
  • Market conditions change
  • New goals developed
  • Purpose has been fulfilled or not
  • Shared plans no longer apply
  • The time period for the business relationship has lapsed

The US Small Business Administration provides more information on co-venture agreements.

The Risks and Advantages of Forming a Joint Venture

Here are just a few of the benefits that can be leveraged when a co-venture is used:

  • Larger companies can access new research materials from smaller companies
  • Smaller companies can benefit from a larger company’s market presence
  • Domestic companies can learn about the social reality of a local area from a foreign company
  • Foreign companies can be exposed to new relationships and expertise from a domestic company
  • Businesses can experiment outside of their core business to develop new products or service
  • Companies can merge their wealth of knowledge in a specific business area

Unfortunately, there are several risks involved in forming a JV:

  • Unclear business objectives
  • Miscommunication or misunderstandings due to differences in management styles or culture
  • Asymmetric business relationship in which one side brings a disproportionate amount of value to the other
  • Delayed return or loss of investments

Joint Venture Agreement vs. Partnership

Without a joint venture agreement, the law may assume your collaboration is a legally recognized partnership and apply the default state laws for tax and liability purposes.

Unlike a partnership agreement, a joint venture only lasts until the end date outlined in the Joint Venture Agreement.

Here are just a few of the differences between a venture and a partnership:

Joint VenturePartnership
  • Temporary basis
  • Permanent basis or indefinite period
  • Contractual relationship
  • New legal entity created
  • Limited scope and purpose
  • Broad scope and purpose
  • Individual tax returns
  • “Pass through” tax entity
  • Individual liability of each co-venturer
  • Jointly and severally liable for debts
  • Limited fiduciary duty to the JV
  • Broad fiduciary duty to the partnership
  • Both co-venturers must sign contracts
  • Partners can sign contracts as agents
  • Custom ownership percentages
  • Default 50/50 ownership

Joint Venture Agreement Sample

The sample joint venture agreement below shows what a typical deal looks like:

joint-venture-screenshot-min

Download PDF
Download MS Word

Related Business Operations Documents

  • Business Contract: An agreement in which each party agrees to an exchange, typically involving money, goods, or services.
  • Business Purchase Agreement: A legally enforceable contract that documents the sale of a business.
  • Business Proposal: A document used to form new relationships with other businesses and organizations.
  • Business Plan: A plan that guides you through each stage of starting and growing your business.

Create Your Joint Venture Agreement in Minutes!

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Joint Venture Agreement Template

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