Answer by LegalEagle™ staff, Northcote VIC 3070

• Apart from any due diligence checks that you have undertaken prior to approaching potential joint venture participants the primary document is the joint venture agreement.
• This agreement is the foundation of your joint venture relationship. It sets out all the rights and obligations of the participants including:
  • how any benefit is to be shared and in what proportions;
  • the responsibilities of each participant;
  • any liabilities, and more.
• A strong and effectively drafted joint venture agreement is the key to your success.
• You should try to deal with as many aspects of the joint venture relationship in the agreement. Key issues to include are:
  • how the joint venture is to be structured;
  • the main objectives of the joint venture;
  • what financial contributions will be made by each participant;
  • how the activities of the joint venture will be authorised and managed;
  • how any property including intellectual property of the joint venture will be held;
  • how disputes will be handled; and
  • appropriate exit strategies for participants.
• Because of the potential complexity of joint venture relationships it is crucial to have a lawyer draft the agreement. This will ensure that it gives effect to your personal and commercial needs and will help to avoid any misunderstandings. Each of you should also get independent legal advice before signing the agreement.
• Joint ventures frequently result in strained relationships between participants. Disputes are not uncommon. To determine the outcome of a dispute the terms of the agreement will be referred to as the primary source of information. Ensuring that the agreement gives effect to your needs will help avoid costly and time consuming disputes.