What is the difference between a joint venture agreement and a shareholders agreement?

A shareholders agreement regulates the relationship between shareholders in a company, while a joint venture agreement governs the broader cooperation between parties, which may include—but does not always require—a joint venture company.

How are intellectual property rights regulated in a joint venture agreement?

A joint venture agreement should set out who owns IP created during the collaboration and how pre-existing IP may be used, including rules for patents, trade marks and know-how contributed by each party.

Why should companies be particularly careful with the dispute resolution clause in a joint venture agreement?

Dispute resolution clauses define how conflicts will be handled and can be decisive for continuity in the collaboration, especially in cross-border arrangements. Agreeing in advance on mediation, arbitration or court proceedings reduces uncertainty and helps prevent costly escalation.

Joint venture agreement

Joint venture agreements are used when two or more parties wish to collaborate in a shared project or company.

Glossary
Joint venture agreement

Explained – what is a joint venture agreement?

A joint venture agreement is a contract that governs cooperation between two or more businesses to achieve a common objective. In practical terms, it addresses what is a joint venture agreement by setting out the definition of joint venture agreement, the joint venture structure, and how the collaboration will be organised, including allocation of responsibilities, financing, and the management of intellectual property. It is common for a contract lawyer to be involved in drafting to ensure clear, enforceable terms. Within commercial contract law, a joint venture agreement (sometimes called a joint venture contract) is frequently used for major investments or international joint venture arrangements where parties pool resources and expertise.

When does a joint venture agreement become relevant?

A joint venture agreement becomes relevant when two or more companies wish to cooperate without merging or acquiring one another (i.e., joint venture vs merger or joint venture vs acquisition). Typical scenarios include jointly developing a product, sharing production resources, or entering a new market together through a joint venture project or a joint venture company. For larger projects, a joint venture can also be the preferred route to clarify risk sharing, obligations and rights between the parties.

Illustration of two corporate buildings connected by a red bridge, symbolising a joint venture agreement, strategic business partnership and company collaboration.

Points to consider when you draft a joint venture agreement

When a joint venture agreement is prepared, several issues should be addressed carefully to avoid future disputes and to support contractual risk management.

Clarify ownership and voting rights in the joint venture company or project.
Define each party’s financial commitments and responsibility for costs.
Regulate the handling of intellectual property and know-how contributed to the collaboration.
Set out how profits and losses will be shared between the parties.
Describe decision-making processes and how disagreements will be resolved.
Agree confidentiality obligations and the protection of sensitive information.
Plan for termination of the agreement or the possibility that a party wishes to exit.

By covering these matters, the parties create stronger conditions for a long-term, stable joint venture cooperation.

Why is a joint venture agreement important?

A joint venture agreement is important because it provides a clear framework for the collaboration and delivers legal certainty. Without it, cooperation risks uncertainty around rights and obligations, which can trigger disputes that could otherwise have been avoided through clear regulation.

The agreement is also central to contractual risk management. By defining responsibility, funding and control points (including an appropriate dispute resolution clause), the parties can prevent future conflicts. This is particularly relevant in an international joint venture where laws and business cultures may differ.

From a long-term cooperation and trust perspective, a well-drafted joint venture agreement strengthens the relationship between the parties, supports effective project governance and creates comfort for investors, employees and external partners.

A shareholders agreement regulates the relationship between shareholders in a company, whereas a joint venture agreement covers broader cooperation between parties, which may include—but does not always require—a joint venture company.

It is used when companies wish to collaborate on a specific project or market without combining their operations. Examples include joint product development or major infrastructure projects, where clarity on what is a joint venture agreement is essential.

The agreement should clearly define ownership of any intellectual property created, and how pre-existing rights may be used. Common areas include patents, trade marks and know-how.

The benefits of joint venture depend on the parties’ objectives. Frequent reasons for choosing this structure include:

Access to new markets
Sharing costs and risks
Combining technical expertise and resources
Enhanced competitiveness through joint initiatives

The agreement is typically prepared jointly by the parties and their legal advisers. A lawyer specialising in commercial contract law ensures that all key issues are addressed.

Dispute resolution clauses determine how conflicts will be handled, which can be decisive for the continuity of the collaboration. Disagreements over interpretation can otherwise escalate into costly proceedings. By agreeing in advance on mediation, arbitration or court proceedings, the parties create predictability—especially in cross-border contracts involving different legal systems.