It is therefore vital for any person considering a joint venture to study the various aspects of this unique approach to business.Ī joint venture is an association of two or more persons based on written or oral contract who combine their assets, property, knowledge, skills, experience, time or other resources in pursuit of a particular project or undertaking, usually agreeing to share the profits and the losses and each having some degree of control over the venture.ĭue to the wide variety of projects that a joint venture can be created to accomplish, a constant issue is whether a venture is a joint venture, a full partnership, or some other type of business. Too often parties seek to rely on verbal understandings or slide into a joint venture due to circumstances without realizing the significant risks involved…such as the unlimited liability that may arise from acts of the joint venture that are not even approved by all joint venturers! If one needs to team up with another person or entity but only for a particular task or project, and one already has a limited liability entity to be one of the “joint venturers,” then it may make sense to create a joint venture agreement which describes the rights and duties of the parties. This fact makes such a structure appropriate in various types of business ventures.
However, limited liability entities can be members of a joint venture, thus allowing some form of limited liability. Note that partnerships and this variation of a partnership, a joint venture, do not necessarily have limited liability. See our article on Business Start Ups While Protecting Your Assets. The reader should first review the contents of our articles on Limited Liability Entities and Contracts before reading further.Ī constant theme in business ventures is the effort to limit the risk.
If the business is directed at and limited to a particular finite task, however, that same partnership is considered a “joint venture” and is the topic of this article. Typical partnerships usually engage in continuous business and comprise two or more persons or entities combining to engage in that business. While most common in construction projects, the business structure termed a “joint venture” is a creation which is actually nothing more than a partnership created for a single project or undertaking which normally lasts only so long as the project lasts.
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