Contract or new company
Some joint ventures are purely contractual, with each party keeping its own operations and sharing defined costs and revenue. Others create a new entity, often an LLC, that the partners own together and that holds the project's assets. The choice affects liability, taxes, how outside financing works, and how hard the arrangement is to unwind later. In New York, partners in a joint venture can owe one another fiduciary duties, which can surprise businesses that thought of the arrangement as an arm's-length deal. The joint venture agreement is the place to state plainly what each party may and may not do outside the venture.
The terms that cause the arguments
Disputes in joint ventures tend to come from contributions and control. One partner contributes cash, the other contributes technology, relationships, or labor, and the value of those contributions gets questioned once results disappoint. Decide in advance how additional funding will be requested and what happens if a partner cannot or will not contribute. Spell out which decisions need both parties' approval and how a deadlock is broken, whether by escalation, a neutral, or a buyout. Ownership of intellectual property developed inside the venture deserves its own clause, since it often outlasts the venture itself.
Planning the exit at the start
Every venture ends, and the cleanest endings were planned. We work through what triggers an exit, how a departing partner's interest is valued, whether one side can buy out the other, and what happens to customers and employees afterward. If competitors are combining efforts, antitrust questions can arise and should be reviewed before sensitive information is shared. At our first meeting we want to hear what each party is bringing, what each expects to get out of the venture, and what would make either side want to leave. Those answers tend to drive the structure more than any template does. If either party is based outside the United States, government review of the investment may also need attention.
