Joint Ventures Law

What is a Joint Venture?

A joint venture is a business agreement in which two or more parties agree to develop, usually for a limited period of time or scope of work, a new business entity with its own assets, usually through the financial contributions of the joint venturers. The joint venturers control the new business entity and share both the expenses and the revenues of the enterprise. Joint ventures can be between people, businesses, or a combination of the two. While joint ventures are usually small projects, major corporations also use this method in order to diversify.

Duration of the Venture

Although often proposed for a limited purpose, joint ventures can also have an indefinite duration. Famous examples of such ongoing joint ventures include Dow Corning, Sony Ericsson, and Owens-Corning. Because the cost of starting many projects can be prohibitively high, a joint venture allows the joint venturers to pool their collective resources in order to achieve the project aims without having to undertake potentially insurmountable or crippling financial obstacles to do so.

Challenges of Joint Ventures

Although joint ventures are a great way to pool capital and expertise while simultaneously reducing the risk of loss to all involved, they create some unique challenges as well. For example, if one party to the joint venture independently develops an idea that allows the joint venture entity to make a substantial profit, should the resulting profits of the joint venture be split evenly or should the inventing entity receive a larger portion of the profits? Problems such as these, often not considered at the inception of a joint venture, may be one reason that nearly half of all joint ventures last less than four years and typically end in a legal battle.

For that reason, it is important to understand what a joint venture is, anticipate potential problems, and account for those possible eventualities in a joint venture agreement. You will find additional resources on joint ventures below, but any person or entity considering a joint venture should have the assistance of legal counsel in preparing any agreements related to their project. For a list of attorneys in your area, you may click on the Law Firms tab on the menu bar, above.


Joint Ventures Law - US

  • ABA - Business Law Section - Joint Ventures

    The Joint Ventures Task Force has developed for publication a Model Joint Venture Agreement with Commentary and Ancillary Documents, similar in concept to other Model Agreements prepared and published by the Committee. The Model Joint Venture Agreement, now available for purchase (see below), is based on a fact pattern that involves a joint venture between two U.S. companies.

  • ABA - International M&A and Joint Venture Committee

    On behalf of our leadership team, welcome to the Committee homepage of the International M&A and Joint Venture Committee. We hope that you will find the content of this page useful. It includes past editions of our newsletter, program materials from past Committee programs, Year-in-Review articles and references to websites which we consider useful for our daily work in the field of international M&A and joint ventures.

  • FTC - Joint Venture Project

    In order to compete in modern markets, competitors sometimes need to collaborate. Competitive forces are driving firms toward complex collaborations to achieve goals such as expanding into foreign markets, funding expensive innovation efforts, and lowering production and other costs.

  • Joint European Ventures (JEV) Program

    The Joint European Ventures (JEV) programme is part of the European Commission's Growth & Employment Initiative. Its aim is the provision of financial contributions for the establishment of transnational joint ventures by innovative SMEs within the EU. This will be distributed indirectly through banks and other financial institutions in Member States under the overall management of the Commission services.

  • Joint Ventures - Overview

    A joint venture is a legal organization that takes the form of a short term partnership in which the persons jointly undertake a transaction for mutual profit. Generally each person contributes assets and share risks. Like a partnership, joint ventures can involve any type of business transaction and the "persons" involved can be individuals, groups of individuals, companies, or corporations.

  • Joint Ventures and Partnering - Business Link

    A joint venture is when two or more businesses pool their resources and expertise to achieve a particular goal. The risks and rewards of the enterprise are also shared. Reasons you might want to form a joint venture include business expansion, development of new products or moving into new markets, particularly overseas.

  • USDOJ Antitrust Division - Joint Venture Guidelines

    The mission of the Antitrust Division is to promote competition in the U.S. economy through enforcement of, improvements to, and education about antitrust laws and principles.

Publications Related to Joint Ventures Law

  • China Joint Ventures as Strategic Investment

    As the United States shows signs of emerging from recession, there has been some discussion on the best way to enter the China market but perhaps under reduced financial constraints. A joint venture partner is often considered because it is less expensive than building from scratch.

  • Joint Ventures - Reference for Business

    Joint ventures are domestic or international enterprises involving two or more companies joining temporarily to undertake a particular project. They have grown in popularity in recent years—joint ventures between U.S. and foreign firms, for example, have increased at an average of 27 percent since 1985. Certainly, not all of them will be successful; estimates of the failure rate of joint ventures reaches as high as 70 percent. Nonetheless, companies persist in initiating them for a variety of reasons. Read more: Joint Ventures - benefits

  • Pyramidal Blind Spots Perils of International Joint Ventures

    Foreign companies often enter joint venture partnerships unaware of the dominating corporate governance practices in developing countries, according to Susan Perkins (Assistant Professor of Management and Organizations at the Kellogg School of Management). In a recent working paper, Perkins and coauthors Randall Morck (Professor of Finance at the University of Alberta) and Bernard Yeung (Professor and Dean of the National University of Singapore) outline the potential costs of not recognizing and accounting for these dynamics in the design of a joint venture.

  • Why Joint Ventures? - Business Guide

    As there are good business and accounting reasons to create a joint venture (JV) with a company that has complementary capabilities and resources, such as distribution channels, technology, or finance, joint ventures are becoming an increasingly common way for companies to form strategic alliances.

  • World News Report - United States Joint Ventures News

    United States Joint Ventures News provides articles and news for global professionals in joint ventures.

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  • Business Joint Ventures
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