Basically, an agreement between two or more parties to arrange how to work together for a common goal. This may be;
- A partnership structure with a partnership agreement
- An alliance where businesses form a legal contract to work together for a specific project, using a joint venture agreement
- The individuals or companies form a new company for this business purpose
What should your document include?
Have you clearly identified the risks and rewards and how they are to be shared?
Have you considered your potential partners’ attitude to collaboration and whether you can trust them?
Is your joint venture project specific or for a number of potential projects?
Is the joint venture intended to be an equal division of power?
Many major projects have recently been carried out using the NEC form of contract, such as the Channel Tunnel Rail Link, Terminal 5 Heathrow and most recently it has been used by the Olympic Delivery Authority for the construction of the Olympic Games 2012. These are all examples where there are also joint ventures existing within the contractual framework.
You need to consider these questions to ensure that when it comes to drafting your agreement we know what you really want and what the agreement should cover and what it should not. Even well planned agreements need to have clear termination and dispute provisions.
A poorly drafted agreement may create greater risk and undermine the collaborative nature of the venture itself.