Contractual joint venture
Agreement in which two parties come together for a particular business project and sign a contract outlining the terms under which they will work together. The parties do not set up a separate legal entity for the project but work together in partnership, sharing the profits or losses of the venture on the terms set out in the joint venture contract. The contractual joint venture is a different legal arrangement from the incorporated or equity joint venture in which two or more parties set up a separate legal entity to act as the vehicle for carrying out the project. Participants in a contractual joint venture normally would set out the objectives of the joint venture in the agreement. They also would agree on the contributions in cash or in kind made by each of the parties to the contract, with details about the valuation of the contributions. The functions of the parties within the project, including their technical contributions and commercial commitments, would be defined in the contract. Arrangements would be made for the parties to meet to discuss progress on the project and to appoint a management committee. See also joint venture; equity joint venture. Model of International Joint Venture Contract.