A joint venture agreement template is a contract where two companies develop a new entity for their mutual benefit. In the world of business, whenever two people and parties agree to start business as partners, they sign a joint venture agreement. Typically, the joint venture agreement template is likely to be described as a partnership agreement. This is because it always serves as a lawful document that not only protects the rights of both parties but also assists them to work together and share profit or loss collectively without any prohibition. As far as the true meaning of a joint venture is concerned, it is a specific business arrangement where two or more parties mutually work together to pool and accumulate their overall resources for the purpose of accomplishing a particular task in a specific period of time. Whereas, a partnership is also a business arrangement, where two or more people do business to earn profit by investing their capital. They do not come together to collaborate, but their purpose is to start a business.
Importance of Joint Venture Agreement:
The joint venture agreement template has legal worth as it is used to prepare a professional agreement. Basically, it bounds two or more companies or individuals in the same frame for one or more signed projects with a limited amount of time. The joint venture agreement is frequently used in many ways. For instance a contractual joint venture agreement, corporate joint venture, and long-term partnership agreement. Moreover, during the preparation or writing this agreement, all business entities will need to agree on the following things; use of collective money, strength of employees, use of equipment, combination of technology, share of profit, division of overall resources and exact time frame. However, when an individual or a business joins hands with other companies in order to have more power in their hands, they sign a joint venture agreement. Whereas, in a partnership, they share their resources to establish a new business or an already existing business.
Situations Where a Joint Venture Becomes Necessity:
Usually, companies start joint ventures when they are fighting in the following situations. For instance, lack of technology, negative popularity, low power/output, less resources, mismanagement and similar situations. These situations are vulnerable for a business to shake hands with another business in order to survive. In other words, a joint venture is a strategic alliance that obviously allows businesses to work on a specific task with certain motives. They can continue to work on their own businesses along with this venture. Almost certainly, the agenda of both the joint venture and the partnership is to earn profit. However, the process in which this objective is achieved is different and can be explainable. There are also certain cases where businesses prefer joint ventures and these situations are; to become an active player in a new territory, to get higher profits, to gain specific skills, to compete in their market and to eliminate competition.
Templates for Joint Venture Agreement:
