And today’s letter J is brought to you by Joint Ventures.
A joint venture is a firm formed to accomplish specific objectives with a partnership; a temporary arrangement between two or more firms. They’re great as a risk reduction tool when entering a new-market and for pooling resources for large projects.
All those involved in a joint venture enter with a contract or agreement that specifies mutual responsibilities and goals. In the contract the parties should be specific about the intention behind the joint venture as well as mark out limitations.
In a JV the parties have a mutual right to control the enterprise, a right to share the profits, and a duty to share in any losses incurred. Those involved owe a standard of care to the other members and have the duty to act in good faith in matters that concern the common interest of the enterprise.
Joint ventures can end at a time specified in the contract, upon the accomplishment of the JV’s purpose, if there is a death of an active member, or if a court decides that serious disagreements between members make the continuation impractical.
So if you want to dive into a large project but don’t want to go in alone or just think it would be better tackled with more heads, look into a joint venture!