Joint Venture Agreement in Tanzania (guide + free templates)

This post covers joint venture agreement templates.

In this guide, I will take you through

• what is a joint venture agreement
• examples of joint venture agreement
•  basic contents of joint venture agreement
• joint venture agreement templates
• etc

let’s get started

Meaning of joint venture agreement

A joint venture agreement means a contractual agreement between two or more parties for the purpose of carrying on a business.

in other words, A Joint Venture  Agreement is a legally binding contract between two or more business entities or individuals entering into a temporary business relationship to achieve a mutual goal.

A joint venture agreement outlines the conditions and commitments of the participants as well as their common objective.

Each party to a contract shares in the risk and reward, and by putting their agreement in writing, they can reduce disagreements.

Since a joint venture agreement is a binding legal contract, either party may file a lawsuit against the other if the other party fails to abide by its terms.

A joint venture agreement is governed by the contract law of a specific jurisdiction.

Other laws may have an impact on the venture depending on the parties involved and the nature of the business.

Examples of Joint Venture

A good real-world example of a Joint venture is the joint venture between BMW and Brilliance Auto Group.

BMW formed a joint venture with the Chinese Automobile manufacturer Brilliance Auto Group in 2003 to produce and sell BMW cars in China. The name of the Joint venture was BMW Brilliance

In that Joint venture, the venturers jointly agreed to invest €450 million in the Joint venture, in terms that BMW took a 50% stake in the Venture company while Brilliance Auto took a 40.5% stake.

The remaining 9.5% went to the Shenyang municipal government.

other examples of joint ventures include;

1. Private persons – For example, independent contractors can combine resources through a joint venture to get a major contract to build a housing development.
2. Corporations – For example, General Motors and Volvo Trucks formed a joint venture to build heavy-duty trucks. This is a joint venture instead of a partnership because the two companies conduct business separately except for this related series of transactions (manufacturing trucks).

Contents of Joint venture Agreement

To write a valid joint venture agreement make sure your agreement contains;

1. Parties-venturers
2. name of the joint venture
3. duration of the joint venture
4. nature of the business
5. Capital contribution clause
6. Rights, and duties of venturers
7. Termination clause
8. Dispute resolution clause
9. Governing law clause
10. Clause for control, influence, and power over the project or transaction.
11. Insurance clause
12. etc.

Joint venture agreement template

The following is the template of the joint venture agreement.

JOINT VENTURE AGREEMENT

THIS JOINT VENTURE is made on this………………day of……………….20…

BETWEEN

(1)_________________ of ____________________ (the “First Joint Venture”); and

(2)_________________ of ____________________ (the “Second Joint Venture”) hereinafter collectively

WHEREAS the parties to this Agreement have agreed to carry on the business of………………….in a joint venture under the name and style of………………..

AND WHEREAS the parties have agreed to execute this Joint Venture Agreement and to commence and carry on business in a joint venture on the following terms and conditions.

NOW THEREFORE THIS AGREEMENT WITNESSETH AS FOLLOWS.

Name

The name of the joint venture shall be……………….

Duration

The Joint Venture shall exist for a period of ……………years and shall commence from……….. The parties may renew the common venture by executing another Joint Venture Agreement. A party unwilling to renew the venture upon the lapse of the initial……………. years shall give a ………….. month advance notice of that intention, prior to the expiration of the Agreement period.

Business 

The main business of the Joint Venture shall be ………………and other allied businesses.

Both parties will be working venturers and thus actively engaged in the day-to-day operations of the business.

Capital

The parties have contributed towards the initial capital a sum of ………………..and ………………for the first and second party respectively.

The net profits and losses of the Venture will be shared by the parties in the proportion to the capital contribution. Net profits will mean the gross profits earned in such a year less the expenses of the business as recognized by accounting principles.

Ownership of Venture assets

All the tangible and intangible assets of the Venture including the goodwill, benefit of business licenses and permits, and benefits of contracts entered, shall belong to the parties in the proportion of capital contributed by each party.

Accounts

The parties shall open two accounts. One accounts for operational requirements and the other for savings purposes. The operational account may be accessed by any of the two parties. The account for savings shall only be operated and accessed upon the written authorization of both parties

Profits

Parties are entitled to a periodical distribution of…………….percent of the net profit. The interval of the distribution/ payment is to be determined from time to time by the Parties.

Object

This Agreement is not intended to create a Partnership and a party to the Agreement shall not have the authority to bind the other party in transactions with third parties unless the express consent of the other party has been secured.

Death of venturer

On the death of any party and there is no legal representative willing or capable to take the place of the deceased party, the share of the deceased party may be purchased by the remaining party at a valuation to be made by an arbitrator.

Termination 

A party desirous of prematurely terminating the joint venture shall give a………….month written notice of that intention to the other party. Unreasonable termination of the venture shall entitle the innocent party to fair compensation to offset the commercial inconvenience and loss resulting from the termination.

The premature termination of the Venture, unless resulting from the death of one of the parties shall be witnessed by a written resolution to that effect.

Governing Law

This joint venture shall be governed by the laws of …………..

IN WITNESS WHEREOF the parties put their respective hands on the day and year first above mentioned.

___________________________          ________________________________