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The structure of the Joint Venture should set out the nature of your partnership.  There are two main types of agreements:

  1. If the Joint Venture is a business, it will be an incorporated joint venture. This type is not recommended when one wants to respond to a competitive bid or a request for quotation.
  2. A co-operative arrangement between two existing parties that keep their separate identities is called a contractual joint venture. This type of joint venture is the safest option to use in responding ton tenders.

In both types mentioned above a Joint Venture Agreement (JVA) is crucial in managing the Joint Venture.

The Joint Venture agreement should include:

  • Objectives: keep it simple and try to have no more than five objectives.
  • Funding: both parties need to specify how much funding they will put into the venture, and for how long.
  • Assets: list any assets or employees that will be transferred throughout the duration of the Joint Venture.
  • Intellectual property: state who owns any intellectual property created during the Joint Venture and how any financial benefits will be distributed.
  • Roles: clearly indicate who has responsibility for the processes involved during the Joint Venture. If you are setting up a new company, the composition of the Board – e.g. Chief Executive and Chief Financial Officer – should be identified and voting rights agreed.
  • Agreement: Incorporated Joint Venture agreements may also need to include a shareholders’ agreement, covering issues such as dividend policy and how the management accounts will be produced and made available.
  • Third parties: any consents or approvals needed from third parties should be explained in the agreement.
  • Finances: state how any profits or losses will be divided between parties. Liabilities must also be clearly listed.
  • Disputes: specify a mechanism by which any disputes can be resolved, such as arbitration by an agreed third party.
  • Duration: specify how long the joint venture would last. If it is open-ended the agreement should state the period of notice that each party should give if they want to withdraw.
  • Confidentiality: you may wish to consider a confidentiality or non-disclosure agreement.
  • Principles: include a statement that is not legally binding on the two parties. Instead it should be a statement of principles – enabling the parties to negotiate a final, legally definitive agreement in good faith.

    To learn more about this and many other tender conditions attend our “Become a Tender Expert” 2-Day workshops and webinars. You can book online at https://howtotender.co.za/workshops/. Contact us at info@howtotender.co.za should you require more information. 

    Remember:  We have various manuals and guides to assist you in the process of completing your tender documents.

    • The Tender Manual is a comprehensive, step by step guide how to respond to a South African Tender. It includes examples of completed SBD forms.
    • The Local Content Instruction Manual – completing Standard Bidding Document (SBD) 6.2 and Annexures C, D & E
    • The SBD Manual: Examples of completed Standard Bidding Documents.
    • Joint Venture (JV) agreement template
    • Tender 101: A beginner’s guide to tenders.
    • Tender Example: Cleaning Services.
    • Tender example: Once-off supply (with NO Functionality requirements)
    • Tender example: Once-off supply (WITH Functionality requirements)
    • Tender Example: NEC3 term contract

    ….. More info