The Scope of Joint Venture Agreements
Joint Venture agreements take on many forms and can include multiple parties, but one thing remains the same… if the parties involved do not have all the details of their agreement in writing, misunderstandings and disputes are more likely to occur. Typically, parties are relying on the smooth operation of the venture, but if this doesn’t happen, the entire purpose of the project is frustrated.
A great way to protect against such misunderstandings and potential disputes is to be extremely specific in the scope of activities. Along with that, limitations to those activities and the decision making power associated with each party needs to be distinctly outlined.
A Joint Venture Agreement should outline very clearly what the purpose of the venture is, what the duration of that venture will be, and how the parties will handle making decisions that may change the predetermined scope of the project. Here’s a few questions to consider with regards to the scope of the Joint Venture Agreement:
- What activities does the Joint Venture expressly intend to do or refrain from doing?
- What are the existing and potential future conflicts with each party’s business ventures that are not covered under the scope of the Joint Venture Agreement?
- What happens if the parameters of the original scope are changed and who makes decisions with regards to any unexpected changes to the scope?
