Joint Venture Agreement

Joint venture in general, is a temporary partnership agreement between two or more persons agreed for doing a special business deal and thereby sharing profit and losses in the agreed ratio. The agreement can be the starting or creation of a new business entity or it may be an overtaking of existing business.

Joint ventures generally involve less number of people in agreement. This can be good as well as bad depending upon how well things are been discussed before. If the amount of work and responsibilities are shared equally taking into account the number of members, the venture can prove to be successful. But in case, things are not managed in the way they should be, the contact may result in a mere failure.

Joint venture agreements follow the same rules as followed by big and large partnerships in industries and organizations. The only difference being that it is short lived and is winded up after completion of the partnership deal. This means the agreement comes to an end once the purpose for which the Joint venture was started is fulfilled. When the goal is achieved, it depends upon the ventures to continue the partnership, wind it or to start all over again. Sometimes these agreements result into large partnerships between them.

Joint ventures can come into existence to fulfill a single objective or for completion of more than one objective also. If it is made for accomplishing a single task it is known as consortium. A consortium mainly includes two parties - the supplier or seller and the other is the receiver or buyer. They are generally formed as a result of franchises, for gaining managerial support, to take advantages of one’s brand name or level etc. The consortium is stopped after the fulfillment of the goal.

Joint ventures are carried on all types of business, multinational corporations or firms because of its diverse advantages. For those who aim to start their business at the small level, joint ventures are very beneficial for them. They provide great opportunities to small scale investors and dealers. Joint ventures are mostly preferred by those who want to start their business between their relatives and friends. They are quite advantageous for in house agreements. On the other hand, if you are starting the ventures with unknown links, attending various meetings and seminars may help in getting well acquainted with co-ventures and can make an agreement successful. Moreover, if you are not able to find an appropriate venture for starting a business deal, there are joint brokers available who help in finding a good partner.

Care should however be taken while choosing the co-venture as he is going to play an important role in taking decisions and other managerial activities.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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