What is a joint venture?
A Joint Venture is a business arrangement where two or more individuals or entities work together for a single purpose and often for a limited time. It allows members to share development costs and resources to create synergies and become more competitive economically, but without becoming liable as general partners for the actions of fellow members. However, where the business relationships between the members of a joint venture become too close, and revenues are intermingled, the entity may resemble a partnership and will risk incurring the “joint and several” liability that is typical of a partnership. Although all members of a joint venture usually have a view to profit, they do not necessarily pool their profits and losses. Joint venture agreements are commonly used between a local and a foreign company to facilitate the entrance of a domestic business into a foreign market and vice versa.
Janel Vaughan Introduction As business projects get larger, technology more expensive, and the costs of failure too large to be borne alone, businesses feel the need to work with joint ventures. In general, a joint venture (JV) is an association of two or more entities (whether corporate, government, individual or otherwise) combining property and expertise to carry out a single business enterprise and having a joint proprietary interest, a joint right to control and a sharing of profits and losses. Regardless of the scope of the undertaking, the nature of the JV or the respective degrees of equity or management involvement, a JV must: (1) be a separately identifiable entity; (2) have an ownership interest in such entity by each joint venture partner (JVP); and (3) have an active management involvement or deliberate rejection of the right to such involvement by each JVP. In increasing numbers, businesses have been reaching beyond national boundaries in an effort to locate new opportuni
