Types of Joint Ventures

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. A 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