Meaning of joint venture agreement
A joint venture agreement means a contractual agreement between two or more parties for the purpose of carrying on a business.
The joint venture is species of association in trade analogous to, or perhaps more correctly a variety of, partnerships in which the partners use no firm or social name although they are associated in joint adventure or trade which is confined to a particular adventure, speculation, course of trade, or voyage.
Law governs Joint venture
A joint venture being a contractual agreement between firms or entities then is governed by the contract law of a specific jurisdiction.
Other laws may have an impact on the venture depending on the parties involved.
Examples of Joint Venture
A good example of a Joint venture is when BMW formed a joint venture with the Chinese Automobile manufacturer Brilliance Auto Group in 2003. The name of the Joint venture was BMW Brilliance, which was formed to produce and sell BMW cars in China.
In that Joint venture, the venturers jointly agreed to invest €450 million in the Joint venture, in terms that BMW took a 50% stake in the Venture company while Brilliance Auto took a 40.5% stake. The remaining 9.5% went to the Shenyang municipal government.
other examples of joint ventures include;
- Private persons – For example, independent contractors can combine resources through a joint venture to get a major contract to build a housing development.
- Corporations – For example, General Motors and Volvo Trucks formed a joint venture to build heavy-duty trucks. This is a joint venture instead of a partnership because the two companies conduct business separately except for this related series of transactions (manufacturing trucks).
For more real-world examples of joint ventures, you may read here
Contents of Joint venture Agreement
As with other contractual agreements, the joint venture must contain;
- name of the joint venture duration
- nature of the business
- rights, and duties of ventures
- Rights of the parties under the joint venture agreement
- Equal control, influence, and power over the project or transaction. However, the contract can give one party complete control.
- Equal ownership of the project (and thus equal shares of profits and expenses)
joint venture agreement sample 1
the following is the sample of the joint venture agreement.
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE is made on this………………day of……………….20…
……………………an adult Tanzanian of P.O. Box………………… (hereinafter called the “first party/venturer”)
…………………..an adult Tanzanian of P.O. Box…………………. (hereinafter called the “second party/venturer”)
WHEREAS the parties to this Agreement have agreed to carry on the business of………………….in a joint venture under the name and style of………………..
AND WHEREAS the parties have agreed to execute this Joint Venture Agreement and to commence and carry on business in a joint venture on the following terms and conditions.
NOW THEREFORE THIS AGREEMENT WITNESSETH AS FOLLOWS.
The name of the joint venture shall be……………….
The Joint Venture shall exist for a period of five (5) years and shall commence from……….. The parties may renew the common venture by executing another Joint Venture Agreement. A party unwilling to renew the venture upon the lapse of the initial five (5) years shall give a two (2) month advance notice of that intention, prior to the expiration of the Agreement period.
The main business of the Joint Venture shall be ………………and other allied businesses. The main business/venture shall involve a vehicle of making………..The vehicle shall be jointly owned by both parties to this Agreement but for conveniences of legal ownership, it shall be registered in the name of one of the parties, namely……………… “the registered party”
The registered party shall not have the power to deal with the vehicle in any manner that is inconsistent with the interest of the other party in the vehicle. It is therefore prohibited for the registered party to hire, mortgage or sell the vehicle without the express consent of the other party.
Both parties will be working venturers and thus actively engaged in the day-to-day operations of the business.
The parties have contributed towards the initial capital a sum of ………………..and ………………for the first and second party respectively.
The net profits and losses of the Venture will be shared by the parties in the proportion to the capital contribution. Net profits will mean the gross profits earned in such a year less the expenses of the business as recognized by accounting principles.
All the tangible and intangible assets of the Venture including the goodwill, benefit of business licenses and permits, benefits of contracts entered, shall belong to the parties in the proportion of capital contributed by each party.
The parties shall open two accounts. One account for operational requirements and the other for savings purposes. The operational account may be accessed by any of the two parties. The account for savings shall only be operated and accessed upon the written authorization of both parties
Parties are entitled to a periodical distribution of…………….percent of the net profit. The interval of the distribution/ payment is to be determined from time to time by the Parties.
This Agreement is not intended to create a Partnership and a party to the Agreement shall not have the authority to bind the other party in transactions with third parties unless the express consent of the other party has been secured.
On the death of any party and there is no legal representative willing or capable to take the place of the deceased party, the share of the deceased party may be purchased by the remaining party at a valuation to be made by an arbitrator.
A party desirous of prematurely terminating the joint venture shall give a two (2) month written notice of that intention to the other party. Unreasonable termination of the venture shall entitle the innocent party to fair compensation to offset the commercial inconvenience and loss resulting from the termination.
The premature termination of the Venture, unless resulting from the death of one of the party shall be witnessed by a written resolution to that effect.
This Deed is executed in triplicate, one copy for each party and one copy for registration and custody under the Registration of Documents Act, Cap. 117. [Laws of Tanzania]
IN WITNESS WHEREOF the parties put their respective hands on the day and year first above mentioned.
SIGNED AND DELIVERED by the ]
within named First Party in the ]
presence of……………………….PO ] 1ST PARTY/VENTURER
SIGNED AND DELIVERED by the ]
within named Second Party in the ]
presence of…………………………… ] 2ndPARTY/VENTURER
PO Box…………….. …………………]
joint venture agreement sample 2
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT IS MADE the 1st day of January 2022 BETWEEN:
(1)_________________ of ____________________ (the “First Joint Venture”); and
(2)_________________ of ____________________ (the “Second Joint Venture”) hereinafter collectively called the “Joint Ventures”.
In consideration of the terms, conditions, and covenants hereinafter set forth, the parties agree as follows:
The Joint Ventures hereby form a joint venture (the “Joint Venture”) for the purposes of the land development project and shall conduct business under the name ‘Landscape developers‘ at _________________.
The term of the Joint Venture shall be 10 calendar years from the date of executing this Agreement.
The capital of the Joint Venture shall consist of USD $10 Billion.
The First Joint Venture shall contribute $ 7 billion and the Second Joint Venture shall contribute $ 3 Billion, which shall be deposited in _____________________ Bank plc and shall be disbursed only upon the signature of all the Joint Ventures.
The profits and losses of the Joint Venture shall be determined in accordance with good accounting practices and shall be shared among the Joint ventures in proportion to their respective capital contributions.
First Joint venture shall have the sole discretion, management and entire control of the conduct of the business of the Joint Venture as the “Ventur Manager.”
As compensation for his services the Venture Manager shall be paid $1,000 per Month during the duration of the Joint Venture and shall be reimbursed for all reasonable expenses incurred in the performance of his duties as Venture Manager.
Each Joint Venture shall be bound by any action taken by the Venture Manager in good faith under this agreement. In no event shall any Joint Venture be called upon to pay any amount beyond the liability arising against him on account of his capital contribution.
The Venture Manager shall not be liable for any error in judgment or any mistake of law or fact or any act done in good faith in the exercise of the power and authority as Venture Manager, but shall be liable for gross negligence or willful default.
The relationship between the Joint Ventures shall be limited to the performance of the terms and conditions of this agreement. Nothing herein shall be construed to create a general partnership between the Joint Venture, or to authorize any Venture to act as a general agent for another, or to permit any Joint Venture to bind the other except as set forth in this agreement, or to borrow money on behalf of another Joint Venture, or to use the credit of any Joint Venture for any purpose.
Neither this agreement nor any interest in the Joint Venture may be assigned without the prior written consent of the Joint Venture hereto.
This agreement shall be governed by and interpreted under the laws of …….. Any claim arising out of or relating to this agreement, or the breach thereof, shall be settled by arbitration in accordance with …………………. Act and judgment upon the award rendered by the Arbitrators(s) may be entered in court having jurisdiction thereof.
Any and all notices to be given pursuant to or under this agreement shall be sent to the party to whom the notice is addressed at the Joint Venture maintained by Joint Venture.
This agreement constitutes the entire agreement between the Joint Venture pertaining to the subject matter contained in it, and supersedes all prior and contemporaneous agreement, representations, warranties and understandings of the parties. No supplement, variation or amendment of this agreement shall be binding unless executed in writing by all the parties hereto. No waiver of any of the provisions of this agreement shall be deemed, or shall constitute a continuing waiver. No waiver shall be binding unless in writing signed by the party making the waiver.
IN WITNESS OF WHICH the parties have signed this agreement the day and year first above written
Signed by or on behalf of the First Joint Signed by or on behalf of the Second Joint
in presence of (witness) in presence of (witness)
Name ____________________________ Name ___________________________
Occupation________________________ Occupation _______________________
You may consider reading the following agreements