A joint venture has no strict legal definition. The term is used to describe a commercial arrangement whereby two or more independent entities work together for a common business undertaking.
A joint venture can take several forms. The most commonly used vehicles for a joint venture are:
Each of these methods has its advantages and disadvantages. For example, a limited company or an LLP each create a new legal entity with the ability to own its own assets, enter into contracts in its own right, and limit the potential liability of the joint venture participants. However they are also subject to formal administrative, filing and accounting rules, and the background to their existence is public information. Partnerships and co-operation agreements are flexible and easy to bring to an end, and the administrative burden is less, but the liability of the joint venture participants is not limited.
In deciding which vehicle is most appropriate, all the circumstances of the joint venture and its commercial objectives will have to be taken into account, including:
Whichever method is used, it is essential that the correct contractual structure is put in place, for the protection of the participants and the smooth operation of the joint venture.
We have extensive experience and expertise in advising on joint ventures and drafting all the necessary agreements used in the different types of joint venture. We take a realistic and commercial approach to a client’s needs, always ensuring that we understand the commercial imperative behind the joint venture, in order to tailor the contractual documents to best fit the client’s requirements.
Every joint venture is different and has its own unique considerations. We cannot therefore provide a general estimate of costs for preparing joint venture contracts.
However, we always endeavour to provide cost estimates as soon as reasonably practicable after we have been given sufficient information to properly assess the client’s needs. We are aware that in commercial matters costs are always an important factor and therefore maintain a policy of regular billing or work in progress updates and transparency on costs.