What is the Key Elements of Joint Venture Agreement in Australia?

March 20, 2024    Corporate Lawyers Perth WA
What is the Key Elements of Joint Venture Agreement in Australia?

The aim of any business, in the long run, is to expand its influence and clientele. One of the ways to achieve this is through joint ventures that enable two or multiple businesses to combine their resources and mastery in the pursuit of a common goal. Joint ventures enable businesses to break into new audiences and markets and work off each business’s prowess.

If you are a business owner debating on a joint venture, it is best to consult joint venture agreement lawyers in WA to guide your decisions. Meanwhile, this article breaks down what a joint venture comprises and its advantages.

What exactly is a joint venture?

A joint venture is essentially a legal contract that binds two or more businesses or entities, called joint venture parties, to coordinate and cooperate with their businesses to pursue a common goal. This goal can be anything that the joint venture parties decide upon, such as:

  • Product launches
  • Market expansion
  • Technological development

Joint ventures bring in the advantages of all the involved parties and businesses, making them incredibly successful if done right. The key here is the joint venture agreement that outlines the duties and obligations of all parties involved and other contract clauses, including shares and financial cuts. That’s why it is important to get your due diligence from capable lawyers before signing the joint venture agreement.

It’s best to seek joint venture legal advice in Perth during this step to ensure clarity.

What types of joint ventures does Australia have?

There are three main types of licenses and forms for joint ventures that are available to businesses in Australia:

  • Incorporated Joint ventures

In these forms, the companies conduct their businesses by incorporating their joint venture trust. The obligations and rights of each involved business are defined in the shareholders’ agreement, which is then used to resolve any disputes if they arise in the future. These are based on Unit Trusts that segregate beneficial and legal interests in the income or assets generated in the joint venture.

  • Unincorporated Joint Venture

In this type, the rights and obligations that each business or party has in the JV are set out in the joint venture documents as extensively as possible. This type is more suitable for singular business ventures or projects because the document for the joint venture in this type limits the partnerships of the companies. There are also taxes and liabilities that come attached to these partnership laws.

  • License

This is a more practical way of executing business partnerships where one party gives the other an exclusive right to disseminate and sell their product. These include exclusive licenses like patents, trademarks, copyrights, etc. Australia’s Trademark Act that the best corporate lawyers in Perth can outline registers these licenses.

What are the advantages of a joint venture?

A joint venture pools various resources and fields of expertise, which makes them highly lucrative if done correctly. Some of the advantages are:

  1. Having shared resources: This includes capital, expertise, and technology, which helps companies cut down on additional costs.
  2. Shared risk: Since the vested interest belongs to multiple parties, the risk of loss is automatically shared among all partners, and hence, the impact of losses is reduced
  3. Breaking into new markets: Joint ventures allow companies and businesses to leverage the existing clientele and relations of their partnering businesses, which helps their business expand.
  4. Diversify the business: With new markets comes the opportunity for companies to diversify their business through new products, branding, etc.
  5. Competitive advantage: having combined resources gives the companies an edge over others, which helps them overtake competitors in the correct conditions.
  6. Flexible: Joint ventures are completely based on the goals the companies coming together decide to set. This makes them as flexible and customizable as they need to be.

Summing Up

Joint ventures are some of the most advantageous business models that enable businesses to diversify and make the most out of their partners and relationships. However, drawing up contracts to properly represent your goals is complicated and requires legal supervision to ensure it complies with territory and state laws. The best corporate lawyers in Perth are seasoned in this field with rich experience. Contact our team for consultations today.

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