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Accounting For Investment In Joint Venture Article
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What Should a Joint Venture Contract Include?
from:You may understand the importance of including a joint venture contract in your joint venture project. What you may not be too clear on is what should be included in the contract in order to protect you and your business partner while ensuring that everyone's role in the project is clearly defined. The more players involved in your joint venture the more information will need to be included in the contract.
Joint venture contracts will vary from situation to situation but should include some of the following items in order to cover all basis and protect all parties involved in the venture. You will probably think of a few details you want to add to this list as you read along. The thing to remember is that you want the contract to cover as many possible outcomes as possible so that you can avoid the potential for things to go seriously wrong in your joint venture.
1)The financial responsibilities of each member. Even joint ventures may require some capital in the beginning for advertising, physical merchandising if there are physical products, web hosting fees, graphic design fees, content writing fees, and countless other incidental fees that are associated with the product you are creating and/or marketing together. Who has which responsibilities, where the money will be taken from and where any, if any, leftover funds will be returned when the venture ends.
2)A potential escape strategy for when the joint venture ends or if a partner decides to pull out of the joint venture at any time.
3)The role of various partners within the joint venture. You should also have a detailed business plan that includes the role of various partners in more vivid detail but the roles of the partners needs to be outline to some degree within the confines of the contract in order to protect the role a person played in the creation of the product if something should ever become disputed in the future.
4)How profits will be divided and dispensed. This definitely needs to be included in the process of the contract so that there are no doubts at all about how and when various partners will be paid once the project gets going full stream.
5)Who is ultimately responsible for the distribution of profits and which account the money will go to. You should also discuss who will have access to that particular account and how you can establish a system of checks and balances so that everyone is comfortable with the way the money is handled.
You should also include any sticking points or contentious issues that have been ironed out in the contract so that there will be no room for doubt as to how things are supposed to be later on. This may seem like overkill to some but it is much better to err on the side of caution and protect everyone involved in the project from the beginning than to leave out an important detail in the joint venture contract that leaves everyone high and dry later on.
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