Joint Venture and Partnership: Definitions, Legal Issues, and Leading Cases

This report discusses the difference between partnership and joint venture, legal issues related to the definition of a joint venture, and examines them with the help of case law. It also covers the selection of business structure.

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company law
SEPTEMBER 5, 2018
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Contents
Definitions of Joint venture and partnership-........................................................................................2
The leading cases dealing with the definition of a joint venture-..........................................................3
The legal issues dealing with the definition of a joint venture-.............................................................3
Selection of business structure-............................................................................................................4
Conclusion.............................................................................................................................................4
References.............................................................................................................................................5

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The joint venture and partnership is two different concept. The joint venture refers to the
contractual agreement, which joins two or more than two people for the object of executing the
specific business enterprise. In a joint venture, each party of agreement agree to share the profit and
loss of business enterprises. On the other hand, the partnership is called link of two or more than
two people to conduct single business undertaking for attaining profit. Generally, there is no
significant distinction between partnership and joint venture. A joint venture is regarded as the form
of partnership.
In this report, the difference between partnership and joint venture, legal issue related to
definition of joint venture is discussed and examined with the help of case law.
Definitions of Joint venture and partnership-
Joint venture is not partnership in severe sense though it is temporary partnership. The joint
venture is not formed through operation of law. The joint venture establishes the fiduciary relation
or confidential relation between the parties. However, the presence of joint venture is subject of
matter, which has to be determined in accordance with the particulars and conditions of every case.
The joint venture is defined in many ways-
 As per the definition of joint venture, the joint venture is business or project, where two or
more than two corporations or people have made investment with the purpose of
functioning together (Bryson, 2016).
 The joint venture is a prearrangement between two or more than two corporations or
individuals to perform together for the specific object or on specific assignment (Elgin, et. al,
2017).
 A joint venture is called commercial undertaking accepted jointly by two or more than two
people which otherwise keep their different recognition.
Further, the partnership refers to the procedure or method of business in which ownership is
shared by two or more than two people. The partnership has been defined as follows-
 The partnership is called relationship where two or more than two individuals, corporations,
or nations perform together in the capacity of partners.
 The partnership is a corporation, which is owned by two or more than two individuals, who
share threats and rewards of undertakings (Nystrom, et. al, 2018)
The leading cases dealing with the definition of a joint venture-

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In the case of Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty
Ltd (1974) 131 CLR 321, the Fourth Media Management Pty Ltd was the promoter. It was made an
agreement with singers Elton John and Cilla Black in respect of making performance in Australia.
Volume Sales (Finance) Pty Ltd gave consent to promoter that it will make available money as loan
to sufficiently finance event. In return, Volume Sales (Finance) Pty Ltd was to be provided one-half
interest in contract and to execute contract as joint venture. It was stated by agreement that
Volume Sales (Finance) Pty Ltd had refunded amount of loan and expenditures. The benefits will be
allocated between promoter and Volume Sales (Finance) Pty Ltd equally.
In this case, it was the question whether the contract between Volume Sales (Finance) Pty
Ltd and promoter was partnership or joint venture. On the basis of fact, it was held that the parties
of contract had made partnership but defined that agreement as joint venture. In particular, Volume
Sales (Finance) Pty Ltd and promoter had entered together to carry out commercial undertaking
with object of making benefit. The profits were required to be allocated and the expenditures should
be shared. The policies related to business were also required to be agreed (Wong, et. al, 2018).
Further. The other question was what was legal nature of interest of Volume Sales (Finance)
Pty Ltd in box office proceeds. On this question, it was held by the court that share of partners is not
considered as specific property but an authority to his share of surplus after asset-realisation, debt
payment and payment of obligations. It states that they relate to partnership that is to membership
of partnership (Cordonnier, et. al, 2016).
The legal issues dealing with the definition of a joint venture-
The joint venture may create in various forms. It can be defined in several terms. There are
many legal issues to be considered at the time of planning of joint venture. The individuals are
required to document the process of sharing the profits and losses taken by venture. It is also
required to clearly define the contribution of cash, services and property. The agreement of joint
venture should clearly define the amount and procedure of termination of joint venture. The joint
venture includes mutual undertaking among people with connection of strategic operations of
business, abilities and targets. It is required by corporations and individual that they should clearly
understand the legal boundaries of complete relationship (Ni, Hu & Hu, 2014).
The joint venture agreement must define the responsibilities of parties in respect of
confidential details, which are established during then arrangement of joint venture. Further, the
main important factor is consenting upon the opportunities of corporations. As per this, the related

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issue is how a joint venture will determine whether to follow an opportunity of business which is
recognised by any party of contract. Furthermore, other important issue is that whether any party of
joint venture can elect to wind or terminate joint venture or whether it is required by both parties of
joint venture to give consent on the termination (Hearn, 2015).
Selection of business structure-
Most common forms of business undertakings in Australia are partnership and joint venture.
Each form has its own advantages and disadvantages. A dedicate balance of competing
considerations are required to choose correct business. The main issue in deciding between
partnership and joint venture is liability. In partnership, partners are jointly accountable for
obligations of partnership. On the other hand, in joint venture members are liable only to extent of
their investment in stock of company. Thus, if joint venture is established by agreement, then parties
are privately discovered to responsibilities in venture, same as partnership. The fiduciary duty of
member of joint venture are not infinite, though partnership fiduciary duties are more interpreted.
These distinctions help to decide structure of business (Castro & Chatani, 2015).
Conclusion
As per the above analysis, it can be concluded that partnership and joint venture are basic
structures of business. At the time of developing the financial and managerial framework, one
should consider the advantages and disadvantages of each business structure to meet specific
purpose.
References

REPORT
Bryson, C. (2016). Engagement through partnership: Students as partners in learning and teaching in
higher education. Oxford: Routledge
Castro, L. C. M., & Chatani, N. (2015). Nickel Catalysts/N, N -Bidentate Directing Groups: An Excellent′
Partnership in Directed C–H Activation Reactions. Chemistry Letters, 44(4), 410-421.
Cordonnier, C., Cesaro, S., Maschmeyer, G., Einsele, H., Donnelly, J. P., & Alanio, A. (2016). Fifth
European Conference on Infections in Leukemia (ECIL-5), a joint venture of The European
Group for Blood and Marrow Transplantation (EBMT), The European Organization for
Research and Treatment of Cancer (EORTC), the Immunocompromised Host Society (ICHS)
and The European LeukemiaNet (ELN). Pneumocystis jirovecii pneumonia: still a concern in
patients with haematological malignancies and stem cell transplant recipients. J Antimicrob
Chemother, 71(9), 2379-2385.
Elgin, S. C., Hauser, C., Holzen, T. M., Jones, C., Kleinschmit, A., Leatherman, J., & Partnership, T. G. E.
(2017). The GEP: Crowd-sourcing big data analysis with undergraduates. Trends in
Genetics, 33(2), 81-85.
Hearn, B. (2015). Institutional influences on board composition of international joint venture firms
listing on emerging stock exchanges: Evidence from Africa. Journal of World Business, 50(1),
205-219.
Ni, C., Hu, M., & Hu, J. (2014). Good partnership between sulfur and fluorine: sulfur-based
fluorination and fluoroalkylation reagents for organic synthesis. Chemical reviews, 115(2),
765-825.
Nystrom, M. E., Karltun, J., Keller, C., & Gare, B. A. (2018). Collaborative and partnership research for
improvement of health and social services: researcher’s experiences from 20
projects. Health research policy and systems, 16(1), 46.
Wong, A., Wei, L., Wang, X., & Tjosvold, D. (2018). Collectivist values for constructive conflict
management in international joint venture effectiveness. International Journal of Conflict
Management, 29(1), 126-143.