A joint venture is a promise of a combining the skills, expertise, market exposure, etc between two individuals or companies and working for a common business goal in mind. A joint venture contract guides the terms of the joint venture agreement wherein the contributions of the parties, their assets, liabilities, etc are clearly listed. The management, decision making bodies, and administrative practices are an important part of the joint venture contract. Any licenses, warranties, intellectual property rights, insurance, etc come under the purview of the joint venture contract. Given below are some key points that are to be kept in mind while designing a joint venture contract.
Points to be kept in mind while preparing a joint venture contract:
- A joint venture contract is generally between two business entities. So it should try to include all possible clauses guiding the agreement along with possible cases of departure from the main aim and its possible consequences, the conditions leasing to violation of the contract, etc.
- The names of the representatives along with the companies they represent needs to be mentioned at the beginning of the joint venture contract.
- The aim of the joint venture contract should be mentioned so that for the life of the joint venture contract the parties can work towards achieving the goal collectively.
- The expected duties of both the parties, which is agreed upon by mutual consent, forms one of the basic premise on which the joint venture contract is built upon.
- The highest decision making bodies, the reporting structure, the organization structure, the employee management issues are all to be mentioned in the joint venture contract.
- The norms that will guide the continuation of the joint venture is also essential to comply with the joint venture contract terms.
- If there are exceptional cases, then even those should be made a part of the joint venture contract. The profit distribution, dividend decisions, etc should also be decided based on the benefit of the entire joint venture company.