What does a joint venture agreement cost? This is a question that two parties may ask when working together to achieve a common goal. So let’s explore this question and review some general information about joint venture agreements.
How Much Does a Joint Venture Agreement Cost?
A joint venture agreement sometimes referred to as a JV agreement, is a contract executed by two parties who have decided that they would like to work together. The contract typically outlines the relationship these parties will have while combining resources to achieve a common goal.
Each party will have specific roles and responsibilities and be expected to contribute to the workload. In exchange, there will be proportionately split profits and distributed ventures. It is important to note that while the entities will share all responsibilities associated with the joint venture, the joint venture is separate from the party’s other businesses.
It is common to confuse joint venture agreements with business partnership agreements. However, these legal documents are not the same. While a partnership agreement is used for a long-term, ongoing relationship, a joint venture agreement is used for a specific period or activity.
A successful and well-written joint venture requires a good working relationship between the parties. Therefore, it is common practice for the parties entering the joint venture to hire an attorney to draft the joint venture agreement.
Based on ContractsCounsel’s marketplace data, the average cost of a project involving a joint venture agreement is $748.
What’s Typically Included in a Joint Venture Agreement?
Joint venture agreements must include specific provisions to be legally binding and protect the rights of both parties throughout the business relationship. The joint venture agreement serves as the blueprint for how the businesses will work together, run the joint venture, and each entity’s roles and responsibilities.
It is common to find the following information in a joint venture agreement:
- Names and addresses of both parties entering the agreement
- The type of joint venture being created
- The joint venture structure and management plans
- The percentage each party owns
- The roles and responsibilities of each party
- How profits and losses are allocated between parties
- Voting privileges
- Meeting requirements
- Termination terms
- Confidentiality provisions
It is essential to consult with a business attorney to ensure that your joint venture agreement has the necessary provisions. Depending on the type of business or the state in which you are forming the business, additional clauses and information may be required.
An experienced contract lawyer familiar with joint venture agreements will guide you through the agreement process and ensure your contract is complete and legally binding.
While the list referenced above is a great start, you may need to include other provisions within your agreement. For example, business lawyers can learn more about your business relationship and draft a joint venture agreement that satisfies both party’s needs. This strategy will ensure you avoid making legal mistakes that haunt you in the future.
Types of Joint Venture Agreements
The two types of joint venture agreements are contractual joint venture agreements and separate legal entity joint venture agreements.
A contractual joint venture agreement is when two entities choose to enter a joint venture together. They will use only a written contract to establish the joint venture and lay out how it will be managed and run.
The other option is a separate legal entity joint venture. For example, some companies form an independent LLC or corporation for their joint venture. The new business would be subject to any laws or provisions that apply to LLCs or corporations in the state in which the joint venture is established.
Regardless of which type of joint venture is established, a clear and detailed joint venture agreement is vital for the business's success.
Examples of Joint Venture Agreement Projects
Joint Venture Agreement Drafting Service
Many joint venture partners will hire a lawyer who offers contract drafting services to create a joint venture agreement. While hiring an attorney will incur legal fees, most business owners find that the drafting services are well worth it. A correctly drafted contract is vital for success.
The drafting of a joint venture agreement usually begins with a consultation with the two business owners to learn about the individual businesses, the joint venture, and the terms they want to include in the agreement.
The attorney will then implement those terms into a joint venture agreement template to include everything the businesses need. Joint venture agreement costs will vary based on how many custom terms must be included in the document.
Joint Venture Agreement Review Service
Review services are another service that many contract lawyers offer that can benefit business owners looking to enter a joint venture. Common reasons for hiring a lawyer for review services include:
- One partner wants the contract reviewed by their own lawyer to ensure it is fair
- An already established joint venture agreement needs to be updated with new terms
- There was a significant change in the joint venture structure
Review services will also incur legal fees, and the cost of fees will heavily depend on the length and complexity of the agreement.
Drafting Costs for Joint Venture Agreements
ContractsCounsel’s marketplace data shows the average joint venture agreement drafting costs to be $995 across all states and industries.
Review Costs for Joint Venture Agreements
ContractsCounsel’s marketplace data shows the average joint venture agreement review costs to be $497 across all states and industries.
How Do Joint Venture Agreement Lawyers Charge?
Contract lawyers can charge for legal services in several ways. The two most common fee structures are hourly rates and flat-fee rates.
Hourly Rates for Joint Venture Agreements
Hourly rate fee structures are commonly used and usually preferred among lawyers. The lawyer will charge the client a set rate for each hour spent working on a case or project when using an hourly rate.
Clients will typically receive an invoice for the total legal costs after the task for shorter projects. However, clients will most likely be expected to pay monthly for ongoing legal representation or long-term projects.
ContractsCounsel’s marketplace data shows the average hourly rate for a contract lawyer ranges from $250 - $400 per hour.
Flat Fee Rates for Joint Venture Agreements
Many lawyers who offer document drafting and review services choose to use a flat rate fee rather than charging clients hourly. Instead, the lawyer will quote the client a set rate for the entire job.
Clients benefit from knowing the total cost of legal services before hiring an attorney. In exchange, the lawyer will usually require the payment upfront, so they know they will be compensated for the project.
ContractsCounsel’s marketplace data shows the average flat fee rate for a joint venture agreement is $748.
Get Help with a Joint Venture Agreement
Do you need help with a joint venture agreement project? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from business lawyers to handle your project. All lawyers on the ContractsCounsel’s platform are vetted by our team to make sure you are provided with top tier service.