The High Court in United Dominions Corporation Ltd v Brian Pty Ltd1held that the term joint venture does not have a fixed meaning but that it “connotes an association of persons for the purposes of aparticular trading, commercial, mining or other financialundertaking or endeavour with a view to mutual profit, witheach participant usually (but not necessarily) contributingmoney, property or skill.”
Section 4J of the Competition and Consumer Act 2010 (Cth) defines a joint venture asan activity in trade or commerce:
- carried on jointly by two or more persons, whether or not in partnership; or
- carried on by a body corporate formed by two or more persons for thepurpose of enabling those persons to carry on that activity jointlyby means of their joint control, or by means of their ownership of shares in the capital, of that body corporate.
Joint Ventures (“JV”) usually have the following characteristics:
- the participants in the JV have come together for the purpose of the JV project and do not necessarily have an immediate expectation of continued association beyond the JV project;
- the JV project is a discrete undertaking of a limited duration and scope at the end of which the JV participants expect to receive their share of profits; and
- each participant of the JV may contribute a certain necessary skill or resource, such as technical expertise or funding that is required.
The participants of a JV oftenenter into a Joint Venture Agreement (“JV Agreement”), which sets out their rights and responsibilities with respect to the JV. They may also choose to enter other agreements governing their rights of management, marketing, cross collaterisation and other issues that may be relevant to the particular JV project.
Therefore, the JV is essentially a contractual relationship and does not constitute a partnership or trust at law. The JV itself does not have a separate legal identity and its participants cannot ordinarily bind each other.
JVs may be incorporated or unincorporated, which generally have the following characteristics:
- Incorporated JVs – a corporation is formed that becomes the JV vehicle with the JV participants being shareholders to the extent of their participation. The incorporated entity may hold the assets of the JV, such as land that is subject of development by the JV; and
- Unincorporated JVs – the JV relationship is governed only by the JV Agreement with assets the subject of the JV being held by the individual JV participants.
Rowe Bristol Lawyers is experienced in advising clients with respect to JVs and JV Agreements, including:
- considering and advising on whether a JV structure is suitable for the objectives and circumstances of the client, including with respect to liability, taxation and governance;
- liaising with other proposed JV participants in relation to the negotiation of the relevant terms and conditions of the JV Agreement;
- drafting the relevant JV Agreement and other related documents to give effect to the objectives of the client, including the roles of each participant, management and governance structure of the JV, restrictions on transfer of interest, costs sharing responsibilities and distribution structure;
- advising on apportionment of risk to protect the interests of the client;
- advising on dispute resolution mechanisms to ensure that JV participants have available to them a mechanism to resolve disputes other than legal action; and
- if necessary, advising and representing the client in relation to disputes arising as a result of participation in a JV.
If you require legal advice in relation to JVs and JV Agreements, pleasedo not hesitate to contact us to arrange a meeting so that we may consider your specific circumstances.
The above information is provided as general information only and should not be relied upon as legal advice. The accuracy of this information may have changed from the date when it was published.
1 HCA 49