What to include in a joint venture agreement in NSW
Joint ventures are a popular way for businesses in New South Wales to combine resources, share risk, and pursue opportunities that might be too large or complex to tackle alone. But like any business relationship, joint ventures can create disputes if roles and expectations aren’t clearly defined.
A joint venture agreement is the key document that governs how the relationship works. Here are the essential elements every NSW joint venture agreement should cover.
Defining the joint venture
At the outset, the agreement should specify:
- Purpose: what the joint venture is being set up to achieve.
- Structure: whether it is an incorporated joint venture (a separate company) or an unincorporated joint venture (a contractual relationship).
- Duration: whether the joint venture has a fixed term or will continue indefinitely.
This clarity prevents arguments later about what the joint venture was actually intended to do.
Contributions of the parties
Each participant must know exactly what they are bringing to the table. Contributions might include:
- Cash.
- Property, equipment, or technology.
- Labour or services.
- Intellectual property.
The agreement should also state whether these contributions are repayable or permanent.
Management and decision-making
Disputes often arise over who is in charge. The agreement should specify:
- The management structure (e.g. a management committee or board).
- Voting rights (equal votes vs proportional to contributions).
- Decisions requiring unanimous consent (such as borrowing money or selling assets).
Profit sharing and liability
Profits and losses should be clearly allocated. In unincorporated joint ventures, each party may also be responsible for their share of expenses. The agreement should also deal with liability — particularly if the venture takes on debt.
Intellectual property
Where IP is created, the agreement should set out who owns it and how it can be used outside the joint venture. This is especially important in technology and creative ventures.
Exit and termination
No joint venture lasts forever. The agreement should include:
- Exit procedures if one party wants to leave.
- Buyout or sale mechanisms.
- Events that trigger termination (e.g. insolvency, breach, or project completion).
Dispute resolution
Finally, a robust dispute resolution clause can save time and money. Mediation and arbitration are common first steps before litigation.
Final thoughts
A joint venture agreement in NSW must be carefully drafted to cover not only commercial terms but also practical realities. Tailoring the document to your specific project helps avoid costly disputes later.
Call 1800 000 566 to discuss how a properly drafted joint venture agreement can protect you. You can also book a free consultation using our online calendar, or fill in the form below.