![]() ![]() This sharing of resources facilitates companies’ expansion into new markets, allowing for relatively low-risk, scalable business growth. The benefits of this type of business relationship center on the acquisition of (shared) resources without an (excessive) outlay of capital. Call today to discuss your options.What are the advantages of joint ventures? We help clients throughout Silicon Valley and remain open to serve you. We want to help our clients reach an amicable solution but are not afraid of litigation if necessary. Our lawyers at SAC Attorneys specialize in business law including joint venture agreements. A joint venture agreement protects the interests of both parties and encourages future facilitation without bad blood. Collaboration is great, but do not let a good working relationship cloud your judgment. You put your heart and soul into the development of a new product, app, technology or method. Contact the Silicon Valley Small Business Lawyers at SAC Attorneys In our next blog post, we will discuss some of the liabilities associated with a joint venture and why forming a partnership is advised for businesses engaged in a long-term relationship with each other. Without a formal joint venture agreement, it is easy for one party to take advantage of the other, and a business dispute could end up in lengthy, time-consuming litigation. This is especially true when discussing who is responsible for what component, who will obtain funding, how profits will be shared, and what the protocol will be for winding up business or ending the venture. However, because their relationship may only be amicable for the purposes of the joint venture, they are advised to memorialize the terms of their agreement in writing. So, if the parties agree to create a joint venture, why is a formal joint venture agreement necessary? Because the parties are not formally merging all business together, and are not business partners in the sense, they are not required to complete any filings with the California Secretary of State. If all these criterions are established, the parties have created a joint venture, whether they have discussed it or not. Costa Victoria Healthcare, LLC (2018) 25 Cal. The businesses must also agree to share both profits and losses of the business. A joint venture exists if two or more parties have entered a business relationship for the purpose of combining property, knowledge or skill to “carry out a single business undertaking.” The parties must share an ownership interest in the joint business and retain joint control over the business dealings even if they have delegated authority to a representative. What could the first company have done to prevent an unfair deal? Should they have gotten the terms in writing? What is a Joint Venture?Ĭalifornia statute states that a joint venture is a business relationship between two or more companies. Now that the second company obtained a patent for the app, they have shared with the first company that they do not have licensing rights, and that the first company will only get 30% of the profits. The two companies had a handshake agreement about the sharing of costs in addition to profits. One company approached the other with the novel idea, and the larger company helped them implement the technology and work on the interface, in addition to obtaining funding. Two small tech start-up companies collaborated on a new phone application they believe is poised to permanently change consumer habits. ![]()
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