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A joint venture is a combination of two or more parties that seek the development of a single enterprise or project for profit, sharing the risks associated with its development. The parties to the joint venture must be at least a combination of two natural persons or entities.
There are four common types of joint ventures: project-based, functional-based, vertical, and horizontal.
A Joint Venture (JV) Agreement is a contract between at least two business entities or individuals entering into a temporary business relationship. By joining forces, the parties hope to achieve a mutual goal.
Key Takeaways Joint Ventures are of four types, namely, Project-based joint ventures, vertical joint ventures, horizontal joint ventures, and functional-based joint ventures. The type of joint venture to adopt depends upon each person's case situation and the synergy companies expect to achieve.
Project Joint Venture ? this is one of the simplest, most common type of joint ventures that most companies enter. It is defined by a single specific goal set by both entities, and by the fact that the agreement ends when the project is completed and the initial goal is achieved.
How Do You Form a Joint Venture? Choose Your Joint Venture Partner. To create a JV, the first thing you'll need to do is choose a partner. ... Decide on the Type of Venture You Want. ... Draft Your Joint Venture Agreement. ... Create a Separate Legal Entity, If Necessary.
It is highly recommended, however, that a complete written agreement is created to avoid confusion and dispute at a later time. See our article on Oral or Written Contracts. The agreement entered into between the parties must evidence the intent of the parties to enter into a joint venture.
Joint ventures can be: incorporated ? eg a company or a limited liability partnership (LLP) unincorporated ? eg a partnership, a cooperation agreement or strategic alliance.