What Is a Joint Venture Agreement?


When two or more businesses want to become partners for a business deal or other purpose, they may make a joint venture agreement.


  • Reasons that businesses make a joint venture agreement include sharing the risks of a deal, having the money to pursue ventures that one company could not pursue alone, getting market access not otherwise available and entering a new geographical area, according to the University of Iowa Center for International Finance and Development.

Components of Agreement

  • A joint venture agreement is a contract for a specific limited business purpose and specified period of time. The agreement outlines what each participant contributes (for example, property, cash or other assets) and what each participant receives in return.


  • The structure of the joint venture could be a partnership, corporation or limited liability company, depending on the geographical locations of the businesses, the tax liability and the liability for injury that each joint venture partner is willing to accept.


  • Depending on the agreement, a joint venture could be managed by one of the partners or the management could be shared among the partners.


  • A joint venture agreement is a legal contract that you must be sure you understand. Consulting a lawyer is usually a good idea. The U.S. Small Business Administration provides a sample agreement for simple joint ventures at www.sba.gov.

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