Are you considering a joint venture? Sometimes two or more is better than one in the construction industry and the answer to your next project could be a joint venture. Here we will introduce you to joint ventures and the benefits and limitations of entering this type of agreement.
What’s a Joint Venture?
A joint venture is a temporary agreement where two or more parties combine resources and skills for the completion of a specific construction project, or a series projects. They can between between private persons such as contractors or between corporations. An example of this would be two construction partnering to bid on and perform contracts for construction projects. Each party involved in the venture will contribute equally money, resources, skill, and more to accomplish the project goal.
It is important to evaluate who you get into partnership with. Like any legal partnership, joint ventures are governed by rules. Be sure to examine the financial history, company history, legal history, and company culture of the you plan to link with. As members, you will have a fiduciary responsibility to one another and share control and management of the property as well as gains, losses, and liabilities of the joint venture.
Some of the benefits parties gain when entering into a joint venture can include:
- A broader geographical reach
- Access to new business contacts
- Shared risk
- Equal control and managements
There are pros and cons to any business relationship. Some of the limitations you should be aware of when entering a joint venture can include:
- Competition restriction
- Misunderstanding each party’s role
- Companies not aligned in common goals
- Misunderstanding cultural differences
- Ineffectively managing communications between both parties
If you are interested in a joint venture, an experienced construction lawyer in Orlando can draft and negotiate your joint venture agreement for you. Legal counsel is also vital when navigating through a contract termination. Contracts can be terminated when business transactions are complete, at the time specified in the contract, at the dismissal of a court, or upon the death of one of the parties in the partnership.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.