Discussion Points for a Joint Venture or Strategic Partnership
Editor's Note: Presently being marketed by the Division is an outstanding book on advising small businesses. The book contains not only suggestions and issues to consider in representing a small business but also contains many of the forms that will assist you in your daily representation of a company. Please read the portion that follows. If you like it, click the link below and purchase the book.
Note: In any new relationship, it is important to explore and define the relative benefits and obligations of the parties at the outset and put them in writing. It is much easier to get this done at the outset, while energy and attention are on the nature of the new relationship and before there is an opportunity for misunderstandings to arise.
- Identification of parties to the agreement, including names, addresses, and other information as appropriate, such as state of incorporation and authorization to conduct business in California;
- Designation of relationship being created, e.g. partnership, or other relationship or form of organization;
- Nature of the enterprise to be undertaken, its scope, extent, and duration;
- Name under which venture is to be carried out;
- Contributions of each party, whether in money, property, time and skill, or other;
- Time at which each contribution must be made and effect of failure of any party to make its contribution at the required time and in the required amount;
- Requirements if any for additional or ongoing contributions and the effect of the failure of a party to make such contributions;
- Right of each party to manage and control the enterprise;
- Duties of each party other than the obligation to make contributions;
- Designation of one party as manager, including specific duties, or the designation of a management committee;
- Division of profits, including definition of profits, and obligations that must be satisfied before division and distribution of profits;
- Apportionment of losses, liability, indemnification;
- Designation of who shall hold legal title to the joint venture property;
- Surety bonds for party in control of the assets;
- Percentage interest or claim of each party in property purchased or created with joint venture funds, profits, or operations;
- Rights of or restrictions on parties to assign or transfer interest in the joint venture including, where appropriate, rights of first refusal;
- Insurance required to protect the parties and the joint venture property (public liability, Internet, personal injury, property damage, fire, theft, workers' compensation for any employees, etc.);
- Effect of death, insolvency or bankruptcy of a party;
- Records and accounting;
- Arbitration or other dispute resolution provisions for matters not specifically fixed by the contract terms or for disputes arising under or relating to the contract;
- Termination of or withdrawal of a party from the joint venture;
- Rights and duties of parties on termination and winding up, including any compensation to be paid to the party charged with the duty to wind up and distribute assets;
- Any representations and warranties to be given by each party to the other; and
- Effective date of agreement
- And anything else that comes to mind in the process.
Jean L. Batman founded Legal Venture Counsel, Inc., in 2004 to provide outside general counsel services to investors, entrepreneurs, and small businesses. As outside general counsel to a variety of companies and individuals, Ms. Batman provides business and financial legal services to privately held entities operating in a broad range of industries. Ms. Batman chaired the ABA Business Law Section's Small Business Committee from 2001 to 2005.
Advising the Small Business: Forms and Advice for the Legal Practitioner
Did you find this article helpful? Do you think more information like this would help you? More information is available. Excerpted from Advising the Small Business: Forms and Advice for the Legal Practitioner, 2007, by Jean L. Batman, published by the American Bar Association General Practice, Solo and Small Firm Division. Copyright © 2008 by the American Bar Association. Reprinted with permission. GP/Solo members can purchase this book, which includes electronic forms, at a discount through the GP/Solo bookstore website: http://www.abanet.org/abastore/index.cfm?section=main .
© Copyright 2008, American Bar Association.