A joint venture is often appropriate for commercial enterprises of any industry, from developers coordinating on a project to overseas companies partnering with local businesses. Often competitors end up in a position where they must cooperate, which is not always an easy situation.
Clarity at the onset
There will be natural tensions with two companies cooperating rather than competing, but you can control this tension by crafting a robust and detailed venture agreement. Typically, such a contract will clearly outline:
- Responsibilities: Each party in the joint venture will take responsibility for certain aspects. In some cases, one party may have approval power over the other, but not necessarily.
- Communication: Proper communication lines should be discussed and solidified at the onset. Any lack of clarity on hierarchy or contact points will result in mistakes and costly delays.
- Risk-allocation: While indemnification may or may not be necessary in a venture, there will be risks taken on the part of both parties. Who responds to a risk and has liability is a vital discussion to have.
- Exit strategy: Joint ventures are temporary by their very nature. While some can last for a long time, that does not necessarily mean it will. Setting terms for the end of the venture at the beginning will save time and money.
Joint ventures can be stressful and difficult, but it does not have to be if you choose the right representation from the onset.
Thorough, continual representation
Much will come down to contract language and the legal realities in Texas for your agreement. You should consider looking for a legal team with skills and experience in joint ventures to craft your co-venture agreement.