What Are Common Client Concerns in Joint Venture Agreements?
When businesses and investors need to draft joint venture agreements, they share similar concerns. Based on data taken from ContractsCounsel, the most common concerns clients have about joint venture agreements include protection of intellectual property, profit sharing, compliance, liabilities, fairness, and exit strategies.
In this article, we outline all these concerns and provide information about how lawyers can help to keep joint venture agreements fair and compliant.
Note: Data from the ContractsCounsel platform, where vetted lawyers connect with clients to draft joint venture agreements, is real yet anonymized.
Protection of Intellectual Property and Proprietary Information
Concern 1: It’s common for clients to fear that they won’t control or own their intellectual property (IP) or any sensitive business information when they embark on a joint venture.
How lawyers help: They can review the joint venture agreement to check that IP clauses are intact and fair. They also ensure that assets created before and during the contract are accurately assigned, while preventing any misuse of proprietary information.
Profit Sharing and Ownership Terms
Concern 2: Clients worry about any vague terms in their agreement, such as regarding profits and equity, that could result in confusion and disputes.
How lawyers help: Your lawyer will check clauses about ownership, profit, and reinvestment policies. The agreement must be transparent and clear to understand.
Regulatory and Industry Compliance
Concern 3: In some industries, such as real estate, finance, and healthcare, it’s crucial for clients to know that the agreement complies with all relevant rules and regulations, such as RESPA or HUD.
How lawyers help: Lawyers will check compliance across industry laws. They’ll also ensure the contract doesn’t have any conflicts of interest.
Liabilities and Hidden Obligations
Concern 4: It’s common for clients to worry that they could be accountable for any surprise liabilities that don’t match their share of ownership.
How lawyers help: They will add or adjust agreement clauses so that all risk is properly assigned and reasonable. They can also include indemnification protections.
Fairness and Clarity of Terms
Concern 5: Some clients want their agreement reviewed by a lawyer so that they are reassured that it’s fair, balanced, and easy for all parties to understand.
How lawyers help: Lawyers will check for and remove any vague, complex, or confusing terms that could cause misunderstandings.
Exit Strategies and Buyout Provisions
Concern 6: If exit strategies and buyout provisions aren’t clearly defined, this can cause disputes, such as if one party wishes to leave.
How lawyers help: Lawyers will add exit, buyout, and valuation clauses to the agreement. This continues operations without any delays.
Key Takeaways
- Top client concerns include IP protection, fairness, and liability risks.
- Disputes can be avoided with a compliant and transparent agreement.
- The contract should include exit provisions to protect parties.
- Legal review keeps the joint venture agreement reasonable, fair, and legal for all parties.
Need help with your joint venture agreement?
If you need to review your joint venture agreement, post your project on ContractsCounsel. You’ll receive proposals from vetted, experienced lawyers who will help you check the contract for red flags and ensure it’s clear and compliant.