HOW TO FORM JOINT VENTURE AGREEMENTS

The first step to forming a joint venture is the proper selection of a qualified and credible partner as it is the key to the success of the endeavor. It can also be helpful to find or if capable, form a research and development team that will find the right company, organization, entity. Once the company has chosen the right one, it is very imperative to discuss the road map of duties and responsibilities of the parties forming the venture to further its business visions and goals, and to set a legal ground on the limitations of the parties in the venture.

Once it is done, a Memorandum of Understanding or a Letter of Intent is signed by the parties in which the basis of the future joint venture agreement is highlighted involving all the possible outcomes (such as complications, increased client base) of the agreement.

Before doing so, the terms and conditions of the agreement must be thoroughly discussed in careful detail to prevent any misunderstanding at a later stage that is why it is essential that parties forming the joint venture must be completely aware of the risk and benefits of what they are getting into. The process and negotiations requires an extensive understanding of the cultural, economic and legal background to which the parties reside. The Memorandum or Letter of Intent is then signed by consulting lawyers that are well versed in international laws and multi-jurisdictional laws and procedures.

Few of the factors that need to be considered before setting up a joint venture agreement include the holding and transfer of shares, access of technologies and resources, human resource risk and benefits, funding, dispute resolution agreements, security, tax implications, company’s confidentiality, change of control in both party’s enterprise, and the termination of the terms and conditions of the joint venture agreement.

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