Unincorporated Joint Venture Agreement

This Packet Includes:

1. Description and Instructions

2. Unincorporated Joint Venture Agreement

Description and Instructions

Unincorporated Joint Venture Agreement

A Joint Venture Agreement is a legal document with which two or more entities can combine to do business or undertake an economic activity together. The parties agree to create a new entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise in the proportion of their capital contribution. The venture can be for one specific project only or a continuing business relationship.

In India, joint venture contracts vary with respect to both the objective of the joint venture and its implementation. As a result, there exist two types of joint venture model contracts: the first in view of creating a company; the second in view of cooperation without creating a company. The model represented by the included form regulates cooperation between parties where no legal entity is created unlike an Incorporated Joint Venture Agreement.

Only one legal instrument is usually necessary such as the one provided below. These agreements are suitable for most commercial and industrial activities for which joint ventures are used, including transportation, prospecting for and developing natural resources, and the hotel and tourism industry.

This is a simplest form of association for joint ventures under which the participants agree to associate as independent contractors rather than shareholders in a company or partners in a legal partnership. This type of agreement is suitable where the parties wish to avoid the formality and permanence of a corporate vehicle.

This agreement should set out the obligations and commitments of the individual partners and how a return on investment will be achieved. Even though no corporate vehicle is involved and the joint venturers will not be partners in a legal sense, it is possible for them to be exposed to claims and liabilities because of the activities of their co-participants on a contractual or quasi-contractual basis. Therefore, an indemnity should be included in the agreement under which one party will indemnify the other for any losses that are caused through the actions of the co-participants

Once a joint venture partner is selected generally a Memorandum of Understanding or a Letter of Intent is signed by the Parties highlighting the basis of the future Joint Venture Agreement.

Before signing the Joint Venture Agreement, the terms should be thoroughly discussed and negotiated to avoid any misunderstanding at a later stage.

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