Agreement of a Joint Venture - Case Study Example

Agreement of a Joint Venture A joint venture is a business agreement that brings together partners that have agreed to contribute towards developing a new entity and assets for a predetermined time. Over the life of the joint venture, the partners will share expenses, revenues and assets. A joint venture agreement document is used when parties wish to enter into an agreement or agreements with other parties to operate business together for a common objective. This will enable each party to take advantage of the capabilities, recognition, network and knowledge of the other parties. This paper will present an agreement to Lunsford Financial entered into by three individuals to construct healthy homes in their bid to get financing. The form of joint venture is a jointly owned corporation. Joint Venture Agreement This Joint Venture Agreement (herein refered to as “Agreement”) made on April 21 2015 by and between A, B and C for the purpose of pooling together expertise in constructing healthy homes. Hereinafter, the parties will individually be refered to as a “Joint Venturer” and together as “Joint Venturers”. Unless otherwise expressly stated herein, the obligations and rights of the Joint Venturers shall be governed by the laws of London concerning construction. Further, it is agreed that each Joint Venturer’s interest in the Joint Venture for all purposes shall be their personal property. Recitals It has been considered advisable by the Joint Venturers to acquire and hold their interests in business via a nominee for the purpose of a commercial collaboration. This is to avoid the necessity of having several and separate agreements and also to legally maintain the title to the business. It will also facilitate both the collection and sharing of profits generated through the business interest. To this end, A has been nominated and agreed to serve as the nominee of the Joint Venturers. The Joint Venturers shall make initial contributions and seek further financing from Lunsford Financial. It is herewith agreed that: Name of the Joint Venture It has been agreed that the Joint Venture shall conduct all its affair and business at all times solely under the name of ABC. Purpose This Joint Venturers wish to establish the Joint Venturers for the purpose of holding and exploring common business interests in the construction of healthy homes. The Joint Venture shall run in the best interests of the Joint Venturers. It shall establish a joint venture between A, B and C that entails operational rules and a governance structure. This Joint Venture seeks to take advantage of the potential of the business of healthy house construction as well as the business background of the Joint Venturers. The Joint Venture seeks to join forces and maximise the ability of each Joint Venturer to make profit. It is agreed that the Joint Venture shall not be used by the Joint Venturers for any purpose other than the common business interest. The affairs and business of the Joint Venture shall strictly be limited to the development, construction and sale of houses. Term It has been agreed by the Joint Venturers that this agreement will initially be in force for a period of nine (9) months and may be renewed upon expiry. However, this agreement can also be terminated and the obligations of the nominee considered completed at a time when one of these events shall happen: (a) when the nominee receives the final net profits that accrue from the business under the Joint Venturers’ common business interests or (b) the Joint Venturers mutually agree to terminate the Joint Venture Agreement. The Joint Venture shall also be said to be dissolved upon the complete disposition or sale of its property and assets or the incompetence or death of any Joint Venturer. Management The common business interests of the Joint Venture shall collectively be managed by the Joint Venturers. It is, however, agreed that key decisions regarding financial matters shall require the express approval of the nominee. Unless it is herein stated expressly to the contrary, no act shall be committed, obligation incurred or sum expended without such approval by the nominee. For the purpose of this Agreement, key decisions are defined as those that will involve acquiring any real property and financing the Joint Venture. The nominee shall be held fully responsible for implementing the decisions of the Joint Venturers. The nominee, A, through the agreement of the Joint Venturers, shall be the managing member of the Joint Venture and will be granted the authority to discharge or duties or cause the discharge of such duties according to the common interests of the Joint Venturers. Such authority shall be retained by the nominee until he is replaced by mutual agreement of the Joint Venturers. The nominee shall be replaced via voting by the Joint Venturers. Duties of the Nominee The original nominee or any replacement shall use his best efforts in good faith and on behalf of the Joint Venture to implement key decisions approved by the Joint Venturers or cause such decisions to be implemented. The nominee shall also conduct the approved affairs and business of the Joint Venture or cause such affairs and business to be conducted. Hence, the key duties of the nominee shall include marketing, leasing, selling or conveying business in the ordinary course of the Joint Venture. The leasing will be for a period not exceeding the agreed term of the Joint Venture and will entail the improvement, management, maintenance and service of property. Compensation of the nominee It is agreed that unless a majority of the Joint Venturers agree otherwise, the nominee shall not be eligible for any monetary compensation for the services he renders as nominee under this Joint Venture Agreement during the term of its existence. Regulatory It is agreed that the nominee will represent the Joint Venture in business and legal matters. The nominee shall be the custodian of the assets of the Joint Venture but liable only for his own purposeful bad faith. Such assets shall be pooled together, exchanged or integrated into the venture by the Joint Venturers. No person(s) not party to this Joint Venture Agreement shall have any kind of right under it for the acts of omission or commission by the nominee. The Joint Venturers will select a certified public accountant to prepare and deliver the Joint Venturer’s information on tax returns and also for each individual Joint Venturer. The preparation and delivery of the tax information shall be done within forty five (45) days after the expiry of the first agreed term and forty five (45) day of any extended period mutually agreed upon by the Joint Venturers. Contributions For the purpose of supplementing the sought-after funding from Lunsford Financial, the Joint Venturers have contributed the amount proposed and agreed on. There shall be an issued share capital of £ consisting of 100 shares owned by the Joint Venturers. It is also agreed that each Joint Venturer shall retain title to other non-monetary property that they shall contribute to the venture. The nominee acknowledges receipt of each Joint Venturer’s contribution as indicated herein. Joint Venturer Amount Contributed A £ B £ C £ Profits of the Joint Venture It is agreed that the nominee shall distribute the business interests and accrued profits for the term of this Joint Venture and Agreement or for as long as the owners of the common business interest are the Joint Venturers. The profits shall be distributed as indicated herein. Joint Venturer Amount Contributed A £ B £ C £ Expenses of the Joint Venture It is agreed that all the expenses and losses incurred by the nominee in the cause of protecting the common business interests of the Joint Venturers shall be paid and accounted for by the Joint Venturers. The payment of such expenses and losses shall be made upon demand by the nominee and shall be in accordance with the ratio each Joint Venturer contributed as indicated herein. Arbitration It is agreed that in the event of any arising controversy, claim or dispute concerning this Joint Venture Agreement and its management or termination shall be settled via arbitration for which the Joint Venturers shall pay. Such arbitration shall be held in London in accordance with the prevailing rules of arbitration. The decision of the arbitrator shall be considered to be final and binding on all the Joint Venturers. Applicable Law This Joint Venture Agreement shall be governed according to the laws of London. The Agreement and the obligations of the Joint Venturers shall be construed, interpreted and enforced in accordance with the provided laws in London. It is hereby expressly stated that each Joint Venturer approves of the personal jurisdiction of the courts and state for any lawsuit that may be filed against any Joint Venturer in matters arising from the Agreement. Termination Upon the dissolution of the Joint Venture as provided under the clause “Term”, it shall be terminated and wound up. The property collectively accrued by the Joint Venture shall be sold thereupon. It is agreed that each joint Venturer will have the freedom to purchase part of or all of the property the dissolved Joint Venture will put up for sale. The Joint Venture will pay for its liabilities and the unsold assets shall be distributed among the Joint Venturers on a pro rata basis according to their capital accounts. In witness whereof the Joint Venturers have caused this Agreement to be executed on the day and year herein above written _________________________________________________ ___________________ [Signature of Joint Venturer]                                                          [Date] _________________________________________________  [Typed or Printed Name of Joint Venturer]   _________________________________________________ ___________________ [Signature of Joint Venturer]                                                          [Date] _________________________________________________  [Typed or Printed Name of Joint Venturer]   _________________________________________________ ___________________ [Signature of Joint Venturer]                                                          [Date] _________________________________________________  [Typed or Printed Name of Joint Venturer] Read More