Features of Joint Ventures
A joint venture typically has the following features.
1. Specific Purposes
Parties create joint ventures keeping pre-determined purposes in mind. They generally state this purpose clearly in their agreement.
2. Agreement
The parties to a joint venture, i.e. the co-venturers, generally execute a written agreement between them. This agreement states details like their obligations, profit/loss sharing ratios, their rights and liabilities, etc.
3. Specific Duration
Since all joint ventures are created for a specific purpose, they generally come to an end once that purpose is fulfilled. The parties can, however, continue working together as well if they mutually agree to do so.
4. Structure of the Venture
Parties can create a joint venture by exercising control on any of the following aspects:
Assets,
Operations,
or
Entity itself.
5. Profit Sharing
The parties always agree on the ratio in which they will share their profits and losses. If there is no agreement to this effect, they have to share profits equally or according to the contribution they made during their admission into the joint venture.
