The term, "joint venture" has often been used to describe separate business entities (e.g., corporations) which are formed by two or more enterprises seeking to collaborate in the conduct of specified business activities. The use of a separate entity allows the parties to limit the liabilities associated with the relationship and, in fact, the structure may be required in order for the parties to avail themselves of incentives and concessions.

Requirements of Joint Ventures

The law has recognized joint ventures as a distinguishable form of business entity, sometimes in the context of two individuals or entities entering into an agreement which takes a form that is very similar to a partnership agreement.

Some of the legal requirements of a joint venture are as follows:

1. Joint ventures are established by contract, expressed or implied, and consist of one or more agreements involving two or more persons or organizations which are entered into for a specific business purpose. Joint ventures are formed for a specific and definable business goal and are established for a limited time, primarily because the complementary production activities involve only a limited subset of the assets of the participants, the complementary assets have only a limited service life and/or the complementary production activities.
   
   
2. Each of the participants to a joint venture contribute property, cash or other assets and organizational capital held by them for the pursuit of a common and specific business purpose. As opposed to a contractual relationship, the contributions (cash, property, intellectual property) in the context of a joint venture are made to a newly-formed business enterprise, which usually takes the form of a corporation, created to pursue the business goals and objectives of the venture. As such, the participants acquire a joint property interest in the assets and subject matter of the joint venture.
   
   
3. The joint ventures' participants share a common expectation regarding the nature and amount of the expected financial and intangible goals of the joint venture. The goals and objectives of a joint venture tend to be narrowly focused, recognizing that the assets deployed by each of the participants represent only a portion of the overall resource base.
   
   
4. The individuals or entities share in the specific and identifiable financial and intangible profits and losses of the joint venture, as well as certain elements of the management of the joint venture.
   
   
5. Joint ventures operating as a separate entity (e.g., corporation or partnership) are to be distinguished from so-called "contractual" joint ventures in which the parties enter into a comprehensive network of contractual agreements in which they lay out the foundation for mutual cooperation with respect to a special goal, such as development and distribution of an identified product.

Joint Ventures Classification

Joint ventures can be classified by the various functions which may be performed by the enterprise.

A joint venture may be formed for:

1. Research and Development Joint Ventures
   
   A research and development joint venture can be a useful structure for combining the creative resources and assets of two or more entities in order to facilitate technical exchange and, hopefully, reduce the amount of time that might otherwise have been required in order to complete the development work. Complex R&D joint ventures include a number of the ancillary agreements including assignment and license agreements covering technology which the venturers contribute to the joint venture's activities.
   
   
2. Manufacturing/Production Joint Ventures
   
   Manufacturing and production joint ventures are primarily dedicated to combining the resources of the parties in order to produce goods that would be available for use or sale by one or both of the parties. For example, one of the parties may wish to contribute the right to use one or more of its patents, as well as any related production technology and trade secrets, to a new joint venture enterprise, while the other party would contribute facilities, equipment, and personnel to manufacture the products covered by the patent.
   
   
3. Marketing and Distribution Joint Ventures
   
   Marketing and distribution joint ventures are used for the purpose of distributing the goods and services of one or both of the parties in a given geographic area. For example, if a United States company is seeking to enter a new foreign market with the assistance of a local partner with substantial expertise in that market, a new joint venture company might be created and the United States company would contribute the products, as well as any trade secrets or trademarks, and the local partner would provide the capital, facilities and human resources required to fully exploit the products in the market.
   
   
4. Hybrid Joint Venture Relationships
   
   Hybrid joint venture relationships combine two or more of the basic product development and distribution functions referred to above. A joint venture of this type is usually intended to serve as an integrated business enterprise, owning or controlling all of the assets and resources which might be required in order to develop and manufacture new products and market and distribute such products in specified markets. Each of the parties will contribute, either directly or through licensing or similar contractual arrangements, all the capital, technology, facilities and human resources required fulfilling the objectives of the joint venture's original business plan.

AGREEMENTS, DOCUMENTS & FORMS:

Memorandum of Understanding
Joint Venture Agreement to Operate International Steel Manufacturing Business
Assignment and License Agreement for Joint Venture
Development and Supply Agreement
Letter of Intent to Form Joint Venture
Partnership Agreement for Joint Venture
Joint Venture Agreement for Exploitation of Patent
Joint Venture Agreement for Operation of Laboratory