JOINT VENTURE AGREEMENT IN COMPANY DRAFTING
A joint venture agreement is a business contract between two or more parties that have decided to develop a business in order to complete a specific project for a specified period of time. The agreement outlines member’s rights and responsibilities and other aspects of the joint venture. A joint venture agreement, like any other legal document, needs to be drafted with care. Before drafting the agreement both parties should evaluate potential problems so they can be ironed out in the contract.
The purpose of Establishing a Joint Venture Agreement
Forming a Joint Venture with an ideal business partner provides a fast way to influence complementary resources that are available with the other partner share each other’s skills, access new market or diversify into new business. There are disadvantages when it comes to Indian global expansion where the Indian Companies find it had to achieve the expectation in the global market in terms of:
- Product quality
- The management process
Advantages of Joint Venture Agreement
- Cross-border business is more demanding and beneficial either it is outright acquired or shared through Joint Venture. Cooperation is a great way of reducing research as well as manufacturing cost without limiting exposure. This process reduces research and manufacturing costs while limiting exposure.
- There is a chance of risk reduction as the business activities of the Joint Venture can be expanded with smaller investment outlays independent.
- It is a mode of gaining good market access. Joint Venture agreements expand their business into other areas of the world as well as consumer segments and product markets. In Joint Venture when the liabilities and risks are shared the pressure on each individual partner is drastically reduced.
- There are many flexible business diversification opportunities to the partners. It provides full freedom to involve with the other company for a full merger or only for a part of the business.
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