Australian startups and businesses should ensure they have the right agreements in place depending on their own circumstances. Progressive Legal can assist with:
It is important to seek legal advice to determine which legislation is relevant to your specific circumstances and to ensure that your joint venture agreement complies with all applicable laws and regulations.
Our corporate lawyers provide advice and representation on a wide range of legal issues that often arise in joint ventures.
A well-drafted joint venture agreement is crucial for several reasons. Firstly, it outlines collaboration terms, preventing misunderstandings. Secondly, it safeguards all parties by addressing liability, confidentiality, intellectual property, and dispute resolution. These provisions mitigate risks and ensure fair conduct.
In the event of a dispute, the documented joint venture agreement serves as a reliable reference. At Progressive Legal, we specialise in creating such agreements. Our services not only include drafting but also provide insights into pertinent legislation and legal requirements for your joint venture.
Joint venture agreements (“JVA”) are agreements which outline the terms of a joint venture. JVA’s are common in business enterprises and allow various parties to combine expertise in pursuit of a common venture. If you are intending to enter into a JVA, it is important to understand the processes and risks associated with JVA’s.
This article will consider: what is a joint venture, what is a JVA, advantages and disadvantages of a JVA, joint ventures vs partnerships and key takeaways.
Put simply, a joint venture is an agreement between 2 or more parties who intend to work together for a common project or a goal. A joint venture can arise between 2 or more individuals, or companies.
Joint ventures are typically used in projects which involve high risk, require large capital costs and/ or where there are certain market dynamics that one party to the joint venture does not have. Joint ventures are used for many short and long term projects like:
Joint ventures can be set up as follows:
In certain situations, parties can elect to set up a company for the sole purpose of the joint venture; or
Where parties do not elect to establish a separate legal entity, parties continue to work together without a company.
A JVA is an agreement between the joint venture parties. Essentially, the JVA is a contract which sets out the terms of the joint venture.
There are not set requirements for what should go into a JVA. However, it is important that the JVA is comprehensive enough to protect both parties sufficiently.
Some key terms to include within a JVA are:
Clearly identify the scope of the joint venture. This includes, ensuring that the JVA defines the purpose and scope of the venture, and clearly specifies the responsibilities and goals of the joint venture as agreed between the parties.
Given the importance of each parties contributions to a joint venture, it is important that expectations regarding contributions are clearly set out. Contributions are not simply monetary and can include, equipment, personnel and other resources.
It is important that the JVA, provides provision for situations of disputes arising. Dispute resolution clauses outline what the parties are to do when a conflict arises (i.e. refer the matter to mediation).
Further, jurisdiction clauses outline what governing law is applicable to the JVA. In situations where the JVA is a cross boarder joint venture, this is particularly pertinent to ensure parties agree on which jurisdiction the disputes are to be brought in.
Where parties are creating intellectual property during the course of the joint of venture, it is vital to ensure that ownership of intellectual property is clearly set out.
In situations where parties are actively working on a project, consideration must be given to the ownership of different types of IP, such as registered and unregistered trade marks, copyright, design registrations, patent registrations and trade secrets, if applicable.
The JVA, should also cover any licences or royalties applicable to the JVA.
Before, during and after the course of the JVA it is more likely than not that the JVA parties will be exposed to confidential information. As a result, it is important that the JVA covers that confidential information is not to be used for any purpose other than the purpose intended by the JVA.
Further, such clauses should survive the termination/cessation of the JVA to ensure maximum protection of that confidential information even after the agreement has finished.
In situations where there are high stakes projects, it is important to have termination clauses which clearly cover what is to happen in situations where a party leaves or terminates an agreement.
There are many advantages associated with JVA’s, including:
Alternatively, there are also disadvantages associated with JVA’s, including:
Joint ventures are distinguishable from partnerships as partnerships are ongoing relationships. In partnership arrangements, a partner is jointly and severally liable for the actions of the other partner.
Across jurisdictions, there is commentary suggesting that joint ventures are the same as partnerships (i.e. in the United States). However, the position in Australia is such that joint ventures and partnerships, are in fact separate and distinct.
Joint ventures are becoming an increasingly popular mechanism for parties to utilise. This is particularly true in situations involving high risks/ high stakes projects.
Joint venture agreements should be properly drafted in order to ensure the interests of the contracting parties are properly represented, protected and maintained during the course of the joint venture.
A joint venture agreement is a legal contract between two or more parties who agree to collaborate on a particular project or business venture for a specific period of time. The parties agree to pool their resources, expertise, and assets to achieve a common goal. Joint ventures can be formed for a variety of reasons, including to expand into new markets, share costs, and reduce risks.
Whether or not you need a joint venture agreement depends on the nature of your collaboration and your specific circumstances. However, in most cases, it is advisable to have a joint venture agreement in place to ensure that the interests of all parties involved are protected and to mitigate the risks associated with the joint venture.
No, it is generally not recommended to rely solely on a template without seeking legal advice.
Joint ventures can be complex arrangements, and a one-size-fits-all template may not be appropriate for your specific needs and circumstances. Using a template can lead to important details being overlooked or missed, potentially resulting in disputes or other issues down the line.
Additionally, laws and regulations regarding joint ventures can vary by jurisdiction and industry, and a template may not accurately reflect the legal requirements in your area. This could potentially leave you vulnerable to legal and financial consequences.
Setting up a joint venture involves several steps. Here are some general guidelines on how to set up a joint venture:
The first step in setting up a joint venture is to identify a partner or partners with complementary skills, expertise, and resources to achieve a common goal.
The next step is to define the purpose and scope of the joint venture, including the goals and objectives, the contribution of each partner, the ownership structure, and the financial arrangements.
The joint venture agreement is a legal contract that outlines the terms and conditions of the joint venture. It is essential to draft a comprehensive and clear agreement that covers all aspects of the joint venture, including the governance structure, decision-making process, liability, dispute resolution, and termination.
It is essential to seek legal advice when setting up a joint venture to ensure compliance with relevant laws and regulations and to protect the interests of all partners.
Depending on the nature of the joint venture, it may be necessary to register with relevant government agencies, such as the Australian Securities and Investments Commission (ASIC) or the Australian Competition and Consumer Commission (ACCC).
Once the joint venture is established, it is important to have a plan for managing the joint venture, including regular communication, monitoring and reporting, and performance evaluation.
“Ian and his team have been great, […]. I offer innovative products and unusual business partnerships, and Ian’s team have been very accommodating and flexible helping me get everything in place.”
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