At JMR Solicitors we can give advice on all types of business contracts and help you to decide which the best to suit your needs.
What is a business partnership?
A partnership is defined as involving two or more individuals, companies, groups or corporations where each partner participates in the operation of the business and is liable for its actions. Partners are also liable for any debts and profits made by the business.
What is a joint venture in business?
Joint ventures are most often short-term partnerships usually to bring about a specific goal, such as accessing a new market or to share costs. Once a joint venture is established, it can structure its business as a general partnership; limited partnership; a limited liability company which limits partner liability and allows the pass-through of profits; or corporation which is treated as an individual with its own liabilities, assets or taxes. The laws that govern joint ventures depend on the type of structure that is established to conduct business and the scope of the partnership.
What are the benefits of going into business as a joint venture?
- The benefits to entering into a joint venture include:
- Accessing new markets and networks
- Sharing the risks with your partner/partners
- More resources and increased capacity
- Access to specialised technology and staff
JMR Solicitors can help you to draft your joint venture agreement, setting out the responsibilities, tasks, contributions, roles, profit share, liabilities, resolution of disputes, management and control of all parties involved.
What is a partnership agreement?
A partnership agreement is more suitable for long-term partnerships. The partnership agreement will define the behaviour and actions of the partners with regards to the business. A written partnership agreement is vital to avoid any uncertainty and the automatic of potentially unsuitable statutory law. Without a partnership agreement, the powers, rights and actions of the partners involved will be controlled by the Partnership Act 1890. Certain provisions include:
- All partners are entitled to share the profits equally no matter how much capital, effort or skill they bring into the business.
- All partners are jointly and severally liable for the liabilities incurred by the company. This means that if a debt cannot be paid then the creditor can pursue all the partners individually and one may be forced into the position of paying the whole debt by
- Any partner can bring the partnership to an end just by giving notice to all the other partners. It is also dissolved if a partner dies.
- Should a partner get into financial difficulties then their creditors can take assets from the partnership to settle them.
- All partners have an equal say in the business and decisions can take time or the business break down in the event of a severe dispute.
- All partners are considered “agents” of the business and act on behalf of the other partners. They can enter into contractual and financial arrangements which are not good for the business but these will be binding.
- Having a partnership agreement in place will let you decide whether to apply the above provisions or not and come up with your on to suit all partners involved.
For more information on Joint Ventures Contact JMR Solicitors
Telephone No.0161 491 3933