--- title: What does a joint venture agreement contain? description: A joint venture agreement explains who will contribute what to the venture, how decisions will be made, and how profits and risks will be shared. image: https://www.turtons.com/hubfs/Stock%20images/Double%20exposure%20of%20businessman%20hand%20working%20with%20new%20modern%20computer%20and%20business%20strategy%20as%20concept-1.jpeg --- [![Turtons | Commercial Lawyers Sydney](https://s3-ap-southeast-2.amazonaws.com/spinfluence/Retina_Logo.png "Turtons | Commercial Lawyers Sydney")](https://www.turtons.com) - [+61 2 9229 2922](tel:+61292292922) - [Contact details](https://www.turtons.com/contact-us-for-a-commercial-lawyer-in-sydney) [**](tel:+61292292922) [**](https://www.turtons.com/blog/what-does-a-joint-venture-agreement-contain#) ** [**](https://www.turtons.com/blog/what-does-a-joint-venture-agreement-contain#) [Browse all articles](https://www.turtons.com/blog) 17 July 2017 # What does a joint venture agreement contain? **A joint venture agreement sets out the parties' rights and obligations in relation to a joint venture. It explains who will contribute what, how decisions will be made, and how profits and liabilities will be shared.** --- ## Nature of the relationship One of the most important functions of the joint venture agreement is to explain the nature of the relationship between the joint venturers. One aspect of this is whether the parties owe [fiduciary obligations](https://www.turtons.com/blog/what-is-a-fiduciary-duty) to one another, or whether theirs is merely a contractual relationship where the parties remain at arms length.  This is an important distinction. Disputes often arise where the parties do not agree upfront on how the relationship is supposed to function. For example, say one party learns of an opportunity that could be pursued by the venture. Should that party be obliged to bring that opportunity to the attention of the other(s)? Or should it be able to pursue the opportunity independently of the venture and its joint venture partners?  Dealing with this in your joint venture agreement will minimise the potential for disputes later. Sharing of profits, risks and liability An important consideration, particularly in terms of the structure of the venture, is how profits, risks and liability will be shared. For example, is it  the intention that the profits and liabilities will be divided according to the parties' ownership interests? Or will the liability of some parties be capped, with other parties having unlimited liability? The most common structures for a joint venture are: - **unincorporated joint venture** - where the parties enter into a contractual relationship that explains how profits, risks and liability will be shared; - **incorporated joint venture** - where the parties incorporate a new company to operate the venture, and the parties become shareholders in that company; - **partnership** - where the parties are jointly and severally liable to third parties for the acts of the partnership (and this can sometimes be inferred, particularly for unincorporated joint ventures that do not have a joint venture agreement); and - **limited partnership** - a partnership where the liability of at least one of the partners is limited, while the liability of others is unlimited.  If you do not have a joint venture agreement, the law may decide how risks and liability will be shared. The risk is that the law may operate in a way that is different to what you have in mind. ## The parties' contributions The joint venture agreement will explain who will contribute what to the venture. This is to ensure that each party understands what they will be committing to the venture, and also to ensure that they are bound by that commitment. A party's commitment does not have to be limited to cash. It might commit other assets (such as premises, equipment or intellectual property), resources or anything else of value.  ## Intellectual Property Most joint ventures will produce intellectual property that is of potential value to each of the joint venture parties. This can range from things like customer lists or information about specific business opportunities, to rights in software code or new pieces of technology.  To avoid the risk of one party attempting to take advantage of the venture's intellectual property for its own gain, the joint venture agreement should explain who will own any new intellectual property created by the venture, and the extent to which the parties may use that property outside the venture. The agreement will also contain protections to safeguard any existing intellectual property - so that valuable intellectual property developed by one party is not lost to the venture or other joint venture parties. ### [Download your free Shareholders Agreement Guide](https://www.turtons.com/shareholders-agreements-a-comprehensive-guide?utm_campaign=Shareholders%20Agreement%20Anchor%20Text%20Trial&utm_source=Anchor%20Text&utm_medium=CTA).  ## Decision-making Joint venture agreements will explain who will manage the venture and take care of its day-to-day operations. It will also usually specify different levels of approval for different types of decision. For example, in an incorporated joint venture, some decisions might be left to the CEO or managing director, whereas others might require the unanimous approval of the owners of the venture. The agreement will normally contain a list of the different types of decision, specifying (for each) what types of approval is required. Examples of the types of decision normally covered are: - borrowing money or entering into contracts above a certain value; - buying a new business, or selling a substantial part of the existing business; - issuing new shares or units in the venture; and - terminating the employment of senior staff members. ## Other provisions Depending on the nature of the venture, the agreement will contain a range of other provisions, including: - when and how interests in the venture can be sold; - how disagreements will be resolved; - exit provisions, such as [tag along and drag along provisions](https://www.turtons.com/blog/tag-along-drag-along-and-other-exit-provisions-in-a-shareholders-agreement); - restraints and non-competition clauses; - clauses explaining the extent to which the venturers will be entitled to receive information about the venture, such as financial information. In many ways, venture agreements cover similar territory to [shareholders agreements](https://www.turtons.com/shareholders-agreement), even where the venture is not an incorporated one. This is because they both deal with a situation where parties are pooling their resources in pursuit of a common objective. In some cases, a shareholders agreement will be used as the joint venture agreement.  Where the venture is not structured as an incorporated one, it will deal with most of the issues covered by a shareholders agreement. It may just deal with them in a slightly different way. [![DD questionnaire](https://no-cache.hubspot.com/cta/default/2568027/8a91deca-2e33-426b-8ea8-89dda02fb114.png)](https://cta-redirect.hubspot.com/cta/redirect/2568027/8a91deca-2e33-426b-8ea8-89dda02fb114) ##### About the Author [Greg Henry | Principal](https://www.turtons.com/blog/author/greg-henry-principal) I support emerging companies in the construction and technology sectors with large, unusual or difficult projects and business-changing transactions. Please contact me if you have any questions related to this post. greg.henry@turtons.com | (02) 9229 2904 [**](https://www.linkedin.com/in/greg-henry-8508421a/) ### Related Posts ### About Turtons Turtons is a commercial law firm in Sydney with specialist expertise in the construction and technology sectors. We help emerging businesses: - navigate their way through large, unusual or difficult projects,  - improve their everyday contracting processes, and - undertake strategic initiatives, such as raising capital, buying businesses, implementing employee share schemes, and selling businesses. ![Greg Henry | Principal](https://www.turtons.com/hubfs/Greg%20Henry.png) Contact [Greg Henry | Principal](https://www.turtons.com/blog/author/greg-henry-principal) greg.henry@turtons.com [![Turtons Linkedin logo](https://www.turtons.com/hubfs/linkedin-logo.png)](https://www.linkedin.com/in/greg-henry-8508421a/) I support emerging companies in the construction and technology sectors with large, unusual or difficult projects and business-changing transactions. Please contact me if you have any questions related to this post. greg.henry@turtons.com | (02) 9229 2904 ### Related Posts - [When do employees pay tax on employee share scheme interests?](https://www.turtons.com/blog/when-do-employees-pay-tax-on-employee-share-scheme-interests) - [Eligibility criteria for the ESS start-up concession](https://www.turtons.com/blog/eligibility-criteria-for-the-ess-start-up-concession) - [What is a deed of indemnity?](https://www.turtons.com/blog/what-is-a-deed-of-indemnity) - [What is a deed of accession?](https://www.turtons.com/blog/what-is-a-deed-of-accession) - [Tag along, drag along and similar clauses in a shareholders agreement](https://www.turtons.com/blog/tag-along-drag-along-and-other-exit-provisions-in-a-shareholders-agreement) - [Warranties in a share sale agreement: 10 tips for sellers](https://www.turtons.com/blog/warranties-in-a-share-sale-agreement-10-tips-for-sellers) ### Related Posts - [When do employees pay tax on employee share scheme interests?](https://www.turtons.com/blog/when-do-employees-pay-tax-on-employee-share-scheme-interests) - [Eligibility criteria for the ESS start-up concession](https://www.turtons.com/blog/eligibility-criteria-for-the-ess-start-up-concession) - [What is a deed of indemnity?](https://www.turtons.com/blog/what-is-a-deed-of-indemnity) - [What is a deed of accession?](https://www.turtons.com/blog/what-is-a-deed-of-accession) - [Tag along, drag along and similar clauses in a shareholders agreement](https://www.turtons.com/blog/tag-along-drag-along-and-other-exit-provisions-in-a-shareholders-agreement) - [Warranties in a share sale agreement: 10 tips for sellers](https://www.turtons.com/blog/warranties-in-a-share-sale-agreement-10-tips-for-sellers) ### Related Posts - [How a joint venture works](https://www.turtons.com/blog/how-a-joint-venture-works) 06-2017 - [Tag along, drag along and similar clauses in a shareholders agreement](https://www.turtons.com/blog/tag-along-drag-along-and-other-exit-provisions-in-a-shareholders-agreement) 05-2017 - [Tag along rights in shareholders agreements](https://www.turtons.com/blog/tag-along-rights-in-shareholders-agreements) 05-2018 - [7 things an investor should look for in a shareholders agreement](https://www.turtons.com/blog/7-things-an-investor-should-look-for-in-a-shareholders-agreement) 05-2017 - [What's the difference between tag along and drag along rights?](https://www.turtons.com/blog/whats-the-difference-between-drag-along-and-tag-along-rights) 05-2018 - [How much does a shareholders agreement cost?](https://www.turtons.com/blog/how-much-does-a-shareholders-agreement-cost) 07-2017 - [What is a shareholders agreement?](https://www.turtons.com/blog/what-is-a-shareholders-agreement) 06-2017 - [Drag along rights in a shareholders agreement](https://www.turtons.com/blog/drag-along-rights) 05-2018 - [Your Shareholders Agreement - 6 FAQs Answered](https://www.turtons.com/blog/your-shareholders-agreement-6-faqs-answered) 05-2017 - [What does a shareholders agreement cover?](https://www.turtons.com/blog/what-does-a-shareholders-agreement-cover) 06-2017 - [Why you shouldn't download a shareholders agreement template](https://www.turtons.com/blog/why-you-shouldnt-download-a-shareholders-agreement-template) 09-2017 ### Related Posts - [How a joint venture works](https://www.turtons.com/blog/how-a-joint-venture-works) 06-2017 - [Tag along, drag along and similar clauses in a shareholders agreement](https://www.turtons.com/blog/tag-along-drag-along-and-other-exit-provisions-in-a-shareholders-agreement) 05-2017 - [Tag along rights in shareholders agreements](https://www.turtons.com/blog/tag-along-rights-in-shareholders-agreements) 05-2018 - [7 things an investor should look for in a shareholders agreement](https://www.turtons.com/blog/7-things-an-investor-should-look-for-in-a-shareholders-agreement) 05-2017 - [What's the difference between tag along and drag along rights?](https://www.turtons.com/blog/whats-the-difference-between-drag-along-and-tag-along-rights) 05-2018 - [How much does a shareholders agreement cost?](https://www.turtons.com/blog/how-much-does-a-shareholders-agreement-cost) 07-2017 - [What is a shareholders agreement?](https://www.turtons.com/blog/what-is-a-shareholders-agreement) 06-2017 - [Drag along rights in a shareholders agreement](https://www.turtons.com/blog/drag-along-rights) 05-2018 - [Your Shareholders Agreement - 6 FAQs Answered](https://www.turtons.com/blog/your-shareholders-agreement-6-faqs-answered) 05-2017 - [What does a shareholders agreement cover?](https://www.turtons.com/blog/what-does-a-shareholders-agreement-cover) 06-2017 - [Why you shouldn't download a shareholders agreement template](https://www.turtons.com/blog/why-you-shouldnt-download-a-shareholders-agreement-template) 09-2017 [![Resources](https://no-cache.hubspot.com/cta/default/2568027/6a1cb105-f5e4-41f7-a333-173c8f91238e.png)](https://cta-redirect.hubspot.com/cta/redirect/2568027/6a1cb105-f5e4-41f7-a333-173c8f91238e) [![Turtons | Commercial Lawyers Sydney](https://www.turtons.com/hs-fs/hubfs/Assets_April%202017/turtons_logo.png?width=146&name=turtons_logo.png "Turtons | Commercial Lawyers Sydney")](https://turtons-2568027.hs-sites.com/home) Level 22, Sydney Place, 180 George Street, Sydney NSW 2000  P: [+61 2 9229 2922](tel:+61292292922) | E: [info@turtons.com](mailTo:info@turtons.com) [Terms of Use](https://www.turtons.com/terms-of-use)  |  [Privacy](https://www.turtons.com/privacy) Liability limited by a scheme approved under Professional Standards Legislation.  ![](https://px.ads.linkedin.com/collect/?pid=1556145&fmt=gif)