A joint venture can be distinguished from a partnership where a joint venture is generally limited to a single project or is limited in duration to a given period. Although the members of a joint venture share the burden of the company`s costs, the profits are managed by each member. For example: Two affiliates may work together in a joint venture to research and develop a particular product, but once the product is ready, each member brings the resulting product to its respective market to market and sell for the exclusive profit of that individual member. In this case, not all members would share the profits of another member. Each member benefits from its own ability to use the product in its respective market. This is different from a partnership where partners are directly involved in a common pool of costs and benefits. «I strongly recommend entering into formal partnership agreements as companies evolve from individual practices to partnerships or combinations,» said Rich Whitworth, Chief Management Officer at Cetera Financial Group. «The main reason is that it sets the `rules of engagement` between the company and its owners. and establishes a roadmap to address entity-level issues. «Partnership agreements need to be well written for a variety of reasons,» said Laurie Tannous, owner of Tannous & Associates Inc. «One of the main reasons for this is that the desires and expectations of partners change and vary over time.
A well-written partnership agreement can meet these expectations and give each partner a clear map or plan of what the future holds. A business partnership agreement is a legal document between two or more business partners that defines the business structure, responsibilities of each partner, capital contribution, company ownership, ownership, decision-making agreements, the process of selling or leaving a business partner, and how the other partner(s) share profits and losses. Mediation and arbitration are superior processes when there is a long-term relationship and the survival of the partnership is desirable. They focus on creating a mutually pleasing solution to a problem, rather than the adversarial approach experienced during a confrontation in the courtroom. In addition, the procedure can be more cost-effective, faster and more efficient than the judicial procedure. .