Contractual joint ventures—avoiding partnership


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Commercial expert
Practice notes

Contractual joint ventures—avoiding partnership


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Commercial expert

Practice notes
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This practice note examines ways of drafting a joint venture agreement to avoid the joint venture being considered to be a partnership.

In order to avoid the inference of a partnership, a joint venture agreement should be drafted so it emphasises the continuing separation and independence of the participants' businesses (best guaranteed by each maintaining separate operational control), and the separate accrual and taxation of their profits.

Separate and independent businesses

The joint venture agreement should be drafted to ensure there is:

  1. •

    no merger

  2. •

    no joint legal or beneficial ownership of any assets used in the joint venture

  3. •

    no joint carrying on of the joint venture business or businesses

The best way to ensure there is no suggestion of the participants jointly carrying on a joint venture business is for their agreement to reinforce that each participant is separately controlling the operations of its own business. In a typical contractual joint venture, each participant is obliged to provide its own contribution to the venture and has complete autonomy within its own sphere of operations. There

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United Kingdom
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Key definition:
Contractual joint venture definition
What does Contractual joint venture mean?

A joint venture that is based around contractual or informal agreements between the parties, that does not entail structural changes. Such joint ventures will often involve collaboration on a particular project rather than creating a long lasting business relationship. Such agreement may also be known as a commercial, unincorporated, co-operative or collaborative joint venture. See also Co-operative joint venture.

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