Cleveland business owners may be interested in an article detailing some of the positive and negative aspects of going into business with another. These joint ventures have risks that can be mitigated by using proper contractual agreements.
Joining up with another company in order to achieve a business goal can hold a lot of promise for success. Working together, the companies can leverage each others’ strengths and minimize weaknesses. However, if the joint venturers fail to properly plan for when things go wrong, this can lead to legal battles down the road. Additionally, when one party has superior bargaining power when negotiating the partnership, this can lead to an unbalanced business relationship.
The lack of a formal agreement for the joint venture is one way that problems can crop up. While the parties are putting most of their effort into getting started on the venture, they often forget to get the complexities of the deal in writing, such as ensuring that the parties both benefit from the agreement. One solution is to create a joint venture agreement that the company can work from and modify as needed. This agreement should address things like who is in control, what type of entity form to go with, what to do in the case of a dispute and many other potential issues. Having full agreement that addresses these various contingencies can help the parties to avoid a lengthy litigation should things go wrong.
An attorney who has experience in business formation and planning could help craft this agreement. The attorney may also be helpful in forming the entity to separate the assets of the joint venture from those of the individual parties and protect them from the venture’s separate liability.
Source: The Huffington Post, “Handcuffs or Rocket-Booster? Crafting Joint Venture Agreements that Launch Your Business Forward“, Jack Garson , July 08, 2014