Joint Venture Agreement

What is a Joint Venture Agreement?

This document can be used to legally form a joint venture between two or more parties who would like to undertake a new project, start a new service, or do some other type of specific work together in order to make a profit. It acts as a legally binding contract, to reflect the intention of all parties to establish a joint venture on the terms set out within.

This Agreement is commonly used for large-scale projects that require significant resources, expertise or funding that a single person or entity cannot manage.

What is the difference between a Joint Venture Agreement and a Partnership Deed?

A Partnership Deed is used to establish a long-term business relationship between the partners, where they share profits, losses, and responsibilities in running the business. It continues unless terminated by partners and all partners have shared liability of the business.

On the other hand, a Joint Venture Agreement is used for a specific project or objective with a specific timeline. Unlike a partnership, each party is separate entity or individual and there will be no joint liability except in relation to the joint project. Thus Joint Venture is more of a temporary nature business relationship.

Is it mandatory to have a Joint Venture Agreement?

No, it is not mandatory. However, having a written agreement provides clear terms and conditions, reduces misunderstandings and offers legal protection for all the parties in case of any disputes.

What does "Joint Venture" mean?

A Joint Venture is a temporary or ongoing business arrangement where two or more individuals or entities come together to pursue a specific objective. Each party contributes resources and shares the profit and loss in a particular ratio.

Who can enter into a Joint Venture Agreement?

Any person above the age of 18 years or entity registered in India can enter into the Agreement.

What can be the duration of the Agreement?

There is no fixed duration for a Joint Venture Agreement. It can be for a fixed period, completion of a certain project or until terminated by either party.

What has to be done once the Agreement is ready?

Once the Agreement has been completed, it must be printed on non-judicial stamp paper or e-stamp paper and signed by all the parties to the Joint Venture Agreement and dated. The value of the stamp paper would depend on the state in which it is executed. Each state in India has provisions in respect of the amount of stamp duty payable on such agreements. Information regarding the stamp duty payable can be found on the State government websites.

Each Party signing party then keep a copy of the Agreement for their own reference.

Is it necessary to have witnesses for the Agreement?

No, it is not mandatory. However, two adult witnesses above the age of 18 years will add a layer of protection to the Joint Venture Agreement in case of any disputes in the future.

What must a Joint Venture Agreement contain?

The Agreement must contain the following clauses:

• Purpose: the specific goal or project of the joint venture.
• Contributions: The resources, capital, or expertise each party will provide.
• Management: how the joint venture will be managed and who will be responsible for day-to-day affairs.
• Profit and loss sharing: how the profits or losses of the joint venture will be shared.
• Duration: duration or timeframe of the joint venture.
• Termination: conditions under which the Joint Venture Agreement can be terminated by either party to the agreement.

Which laws are applicable to a Joint Venture Agreement?

Joint Venture Agreements in India are subject to the Indian Contract Act, 1872, general contract principles as well as laws protecting intellectual property rights such as the Copyrights Act, 1957 and Trademarks Act, 1999.

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