When approaching any type of joint venture partnership, a written contract is a must. This document will protect your interests and the interests of your partner while the partnership is in force.
Some business owners are intimidated by the prospect of designing a joint venture contract, especially if they have never had experience with legal documents before. While you can hire an attorney for this purpose, you can also easily design your own agreement with these key components in mind.
Goal
The first component to include in your JV contract is the purpose of the joint venture. You and your partners must enter into this agreement with similar goals in mind, and these must be clearly spelled out in your contract. The method by which you will achieve these objectives should also be carefully outlined, ensuring that all parties come to the agreement in full knowledge of what their responsibilities will be.
Benefits
Most JVs are formed because each entity expects to benefit from the arrangement in some way. For newer businesses, this often means getting email lists and link traffic from a larger, more established business. Larger companies generally enter into a joint venture because they can earn commissions on sales made by their partners. No matter what your benefits are, fully include them in the contract so no one is disappointed in the outcome of the deal and no disputes arise after the fact.
Strategy
This is the process that both companies will use to achieve their goals. It will provide the brass tacks of the marketing concept that will be used to promote all the companies involved. It may also imply the specific responsibilities each company will have to ensure that the end result is produced. Since unrealized expectations can be the source of many lawsuits, make sure your mutual expectations are realistic by accurately describing them in your contract.
Time frame
Many JV partnerships are established for a specific period of time, complete with an expiration date when the partnership will end. Even if you want your partnership to be more open, it’s a good idea to agree on a date when you’ll review the agreement to make sure it’s still working to the benefit of everyone involved.
By providing a specific timeline for your JV partnership, you give all partners the opportunity to back out of the deal if it isn’t beneficial enough. If the partnership is going well and you want more time, you can renegotiate your time frame when the initial deadline arrives.
JVs are legally binding businesses, and the right contract will go a long way to protecting your interests and providing a way out if the deal doesn’t work out. Whether you choose to hire an attorney to draft an agreement for you or use a template you find online to draft your own, the contract is the key ingredient to a successful joint venture.
