Definition of Joint Ventures
Joint ventures, or a joint venture in Arizona, like in the rest of the United States, is a commercial structure in which two or more parties agree to pool their resources to complete a certain goal. This task might be a new project or any other type of business activity.
Every party involved in a joint venture (JV) is held responsible for the earnings, losses, and expenditures associated with it. The venture, however, is a distinct entity from the participants’ existing economic interests. Furthermore, the joint venture’s duration is normally restricted to a set length of time or until a specified goal is realized.
Although joint ventures are not officially regulated by legislation in Arizona or any other state, they are subject to standard contract law principles. Moreover, depending on the structure of the joint venture, regulations governing corporations, partnerships, or Limited Liability Companies (LLCs) may apply.
Drafting a Joint Venture Agreement
When setting up a joint venture in Arizona or any state, it’s important to establish a written agreement outlining the rights and responsibilities of all parties. This agreement may include specifics such as:
- Objectives of the joint venture.
- Initial contributions of each party, which may include capital, personnel, assets, intellectual property, or other resources.
- Distribution plan of profits, losses, and dividends among the parties.
- Management and operational controls for the venture.
- Procedures for dispute resolution.
- Clauses for termination or exit strategy.
Get legal advice first before deciding on forming a joint venture. This is to ensure all aspects are properly addressed and all parties’ interests are protected.
