Joint Venture agreements - drafting issues key

The main provisions in any JV include:

(1) Clearly defined the goals of the company.

(2) The degree of participation and the roles of each joint venturer in the company management;

(3) The contribution of capital and ownership of the property rights / division of profits and losses;

(4) A dispute mechanism to avoid stalemates of management which can produce of blocking or dispute;

(5) Termination/liquidation of the JV and the provisions of redemption;

(6) Confidentiality; and

(7) Compensation.

(1) Clearly defined business objectives. Initially, the agreement should throw the object of the joint venture, usually a commercial interest or a common investment. For example, paragraph, could say: "1.1." Business purpose. The joint venture company is as follows: "and then describe the business purpose." This paragraph should also define the duration of the agreement.

(2) The degree of participation and the roles of management of each joint venturer. Then the agreement should outline the roles, responsibilities of management and degree of participation of each joint venturer. This provision will be contractually enforceable, so it must be written clearly define the roles, obligations, rights and obligations of the parties. In the case of a new entity or where a capital investment is involved, it is typical to the representation of the address on the joint venture or Board of Directors of the other party of directors or similar governing body.

(3) Contribution of capital and property rights/Division of profits and losses. The agreement should then describe inputs of capital and other resources, that each party will provide to the joint venture, and the method and the percentage of the profits and losses shared enterprise. Who will be primarily responsible for loss, and when and how should shared profits? Usually the parties often share profits pro rata according to their respective equity interests. In cases where a company is helping more liquidity, however, that the company may receive priority on the distribution of profits.

(4) A mechanism for dispute resolution. The agreements must set out the manner of an internal mechanism to resolve disputes that may arise between the venturers. This mechanism is necessary to avoid the impasses of management which can produce of blocking or dispute. None of the parties would benefit from claims externally by way of litigation or arbitration while the joint venture is in place. This provision would create a Council, completed by the leaders of each joint venturer, which would be responsible for the hearing and resolution of disputes.

(5) The termination of the joint venture / redemption provision. Joint ventures are expected to generally not last forever. The parties often provide a date of termination, the date on which contractual arrangements will end or part will purchase the other game of fairness. Redemption provisions may be difficult to negotiate in advance because the parties is perhaps not able to predict accurately the value of the strategic alliance or joint venture at the time of the redemption. One solution is to ensure that evaluation will be based on income or profits at the time of the redemption or that a third-party evaluator will determine the assessment. Moreover, the parties may adopt a "rifle" or provision "auction", by which a party initiates the process by offering to buy the other party to a specified assessment and the other party must agree to buy or sell at this price or to start an auction by proposing to buy at a higher value.

(6) Confidentiality / intellectual property. A strategic alliance or joint venture parties should carefully consider how to allocate, monitor, and protect confidential information and other intellectual property is contributes to, or developed, in their business relationships. The parties may wish to provide that all employees and consultants with access to confidential information must run a separate autonomous non-disclosure and confidentiality agreement. The parties should also consider how to allocate new IP that is developed in the business relationship. A joint venture where classic new intellectual property becomes the property of the new entity, the parties should consider who will have the new intellectual property if the entity is dissolved later

(7) Compensation. Finally, a provision for compensation of a joint venture agreement must be in place to compensate the Manager and its directors, officers, employees and agents and any person who is or was serving at the request of the joint venture as a Director, officer, partner, fiduciary, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against liability. More important, this provision should cover any such Director or costs of the employee to a suitable third party right, including counsel's fees, judgments, fines and amounts paid in the colony, actually and reasonably incurred by the indemnitee in the defence or settlement of this action, adapt or procedureIf such Indemnitee acted in good faith or in a manner reasonably believed by such indemnitee in or does not oppose the best interests of the joint venture; provided that conduct of the Indemnitee must not constitute a deliberate or reckless misconduct or gross negligence.

Mark Warner is research analyst a Joint Venture Agreement for RealDealDocs.com. RealDealDocs gives you access to insiders to millions of legal online documents developed by law firm high to United States you can download, edit, and print. Search free of charge to the RealDealDocs.com.