If you’re a business owner, you may come across an opportunity to work in partnership with another party for the benefit of both of your organizations. The law allows for businesses to legally work together and share assets with each other for a period of time, providing both parties agree. If two or more businesses or entities believe it is in their best interests to work together in this way, a joint venture may be an appropriate course of action.
A joint venture is a legal partnership between two or more parties allowing for cooperation and the sharing of profits, losses and other forms of capital. These types of partnerships can have numerous benefits and are particularly popular for international firms. Benefits may include exposing smaller businesses to new markets or the ability to combine resources and create new efficiencies. Through a joint venture, businesses have the opportunity to work together toward a common purpose for a finite period of time.
Establishing a contract
Although a contract is not technically needed to enter into a joint venture, many businesses decide to work with an attorney to outline the details of these unique partnerships. Having a written agreement in place allows business owners more control over their operations and how the joint venture will work.
Joint venture agreements may contain details related to the terms and duration of the partnership, and may also include percentages of ownership, shares of profits and losses, each partner’s investment, the expected responsibilities of each partner and the extent to which each company will share or transfer assets. Businesses may also wish to preemptively determine how disagreements or conflicts will be settled, and terms needed for the partnership to be terminated.
For international businesses, joint ventures may be helpful in outlining relevant laws, currency conversions, shipping regulations and standards of international business.
If no agreement exists, each party must at least participate in a verbal agreement to share elements of each other’s business, and must contribute goods in the form of money, services or property to the partnership. Should business owners believe that a joint venture would be beneficial, all parties involved must understand that they are required by law to adhere to duties of loyalty and care for their partners. This means each business is responsible for cooperating, exercising reasonable care toward a partner’s business and carrying out business decisions while keeping the best interests of one’s partner in mind.
Through a joint venture, multiple parties with different strengths and assets may work together to effectively accomplish shared goals. Speak with a skilled lawyer to learn more about the opportunities provided through these arrangements.
BoltNagi is an established and well-respected corporate law firm serving businesses and organizations throughout the U.S. Virgin Islands.