This International Joint Venture Contract governs the relationship between two companies located in different countries, and which set up a third company (the Joint Venture). This new company would usually be located in the same country as one of the two partner companies, with the purpose of mutually establishing an activity with its own objectives: marketing and distribution, research, manufacturing, etc.
The contract establishes all the agreements needed to start up and manage the Joint Venture. To ensure a contract that best suits your needs, we have listed a number of options for you to choose from for certain specific aspects of the contract (the company’s object, capital stock, valuing of contributions made, organization and administration, decision-making, etc.). Furthermore, the contract makes reference to the viability studies prior to the setting up of the company and the financing of its costs.
Parties clauses
- The object of the Joint Venture
- Territory
- Feasibility Study.
- Constitution of Joint Venture
- Term
- Capital Stock
- Contributions from stockholders
- Contribution of intangible assets
- Responsibility of contributions
- Valuing contributions
- Technical or commercial commitments
- Organization
- Administration and management
- Representation
- Responsibility
- Default of obligations
- Share of profits and losses
- Access to information
- Agreement not to compete
- The taking of decisions
- Impasse
- Restrictions on transfer of Stock
- Change in the control of one Party
- Replacement of one Party
- Warning of termination of Joint Venture
- Termination of Joint Venture
- Liquidation of Joint Venture
- Continuity of Joint Venture by one Party
- Force Majeure
- Resolution of disagreement
- Applicable law and competent jurisdiction
- Prohibition of granting rights or obligations to third parties
- Confidentiality
- Expenses prior to the establishment of the Joint Venture
- Other costs and taxation
- Language
Sample of content
DATE: …………………………….
BETWEEN:
…………………………… [company legal name] whose registered office is at ……………………………….
[address, city and country] and registration/fiscal number is …………………………, represented by
……………………………………………………. [name and surname, position] (hereinafter referred
to as “Company A”),
AND:
…………………………… [company legal name] whose registered office is at ……………………………….
[address, city and country] and registration/fiscal number is ……………………….., represented by
…………………………………………………………… [name and surname, position] (hereinafter referred
to as “Company B”).
Both parties express a mutual recognition of their legal authority to undertake the present Joint
Venture contract and declare that:
- Company A is a company based in ……………….., with presence in …………….. [mention
countries] and extensive experience in the ……………….. sector, its core activity being
…………………
- Company B is a company based in ……………….., with presence in ……………. [mention
countries] and extensive experience in the ……………….. sector, its core activity being
…………………
III. Both parties are interested in establishing mutual cooperation and consequently agree
to the creation of a Joint Venture.
- The constitution of the Joint Venture shall be implemented according to the laws
pertaining to foreign investment in the country in which the company is established, and
within the regulatory environment of the ……………….. sector.
- To this end, both Parties agree to abide by the following agreements:
ARTICLE 1. OBJECT OF THE JOINT VENTURE
Both Parties agree to join resources and endeavors according to the stipulations of the present
contract in order to:
Alternative A. Develop jointly ………………………………………………………….. [describe the activity].
Alternative B. Exploit jointly………………………………………………………………. [describe the activity].
Alternative C. Research jointly…………………………………………………………… [describe the activity].
Alternative D. Commercialize jointly………………………………………………….. [describe the activity].
Alternative E. Produce jointly ……………………………………………………………. [describe the activity].
ARTICLE 2. TERRITORY
Alternative A. The territory in which the Joint Venture is concerned shall be exclusively the
whole of ……………….. [mention country or countries].
Alternative B. The territory in which the Joint Venture is concerned shall be initially the whole
of ……………….. [mention country or countries], and at a later stage the territory that includes
……………….. [mention country or countries].
ARTICLE 3. FEASIBILITY STUDY
Prior to the constitution of the Joint Venture, both parties may agree to the implementation of
a Feasibility Study including, among others, the following elements:
(a) Definition of the business model;
(b) Analysis of the regulatory environment pertaining to the activities to be undertaken
within the territory hereunder;
(c) Evaluation of market potential;
(d) Valuing of assets contributed by the partners;
(e) Business plan; and
(f) Schedule of action.
Some Tips
DATE
The date when the contract comes into force is the one that appears in its header, as mentioned
in the final paragraphs of the contract, before signatures (This Contract comes into force on the
date written above).
In some contracts -for example in the Supply Contract- the date of coming into force is also
mentioned in one of the clauses. In these cases you have to verify that the two dates inserted in
the contract (in the heading and in the corresponding clause) are the same, in order to avoid
discrepancies.
PARTIES
Be sure to insert in the first page of the contract the full details of the Parties:
When a Party is a company you must insert the following information: legal name, legal form
(limited, incorporated, etc.), full address, registration data and fiscal identification number.
When a Party is an individual that works as independent professional (for example a
commercial agent) you must insert the following information: full name, profession, full
address and fiscal identification number.
CLAUSES
Clauses with different alternatives: choose the most favorable
In the most important clauses of each contract (exclusivity, payment terms, applicable law and
competent jurisdiction, etc.) several drafting alternatives are proposed so you can choose the
most appropriate to each situation. Therefore, the user before submitting the contract to the
other Party must choose the alternatives that seem best suited to their interests, and eliminate
the rest.
Clauses with blank spaces to be completed
In several clauses of the contract blank spaces appear with dots (…………………..) that the user
has to complete inserting text. Following the dots, between brackets, you will see the data and
explanations to insert the text.
When the text between brackets is in normal letters (the same as the contract) and
separated by “,” or the word “o”, the user must insert one of the options suggested.
Example of blank space (……..) with options to select between brackets:
Orders handled before completion of the present Contract which produce sales transactions
within ………. [1, 2, 3, 6] months shall entitle the Agent to receive the corresponding commission.
In this case the user must choose between options 1, 2, 3 or 6 months and insert one in the blank
space (……..).
When the text between brackets is in italics the user has to insert the data and information
requested and eliminate the bracketed text.
Example of blank space – (………) to insert text:
Both parties, by mutual consent, resolve to refer any dispute to the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in
accordance with said Rules. The place of arbitration shall be ……….. [city and country]. In this
case the user must insert in the blank space (………..) the city and country chosen to conduct the
arbitration and afterwards eliminate the bracketed text [city and country].
Notices Clause
Sometimes it may happen that the official address of the Parties which appear at the beginning
of the contract is different from which is to be used for communications between the Parties
during the terms of the contract. In this case the user should include at the end of the contract
a Notices Clause.
Example of Notices Clause:
Notices. – In order to comply with their contractual obligations, the Parties establish the
following address for the provision of notices related to this contract:
– Party 1 ……………………………………………………. [insert full address].
– Party 2 ……………………………………………………. [insert full address].
ANNEXES
The contracts incorporate some Annexes, each of them, referenced to the corresponding Clause.
Annexes are drafted in commonly used formats, although the user must adapt these formats
and the text inserted in them to each particular situation.
SIGNATURES
People who sign
Persons signing the contract on behalf of the company must have the authority to do so and
preferably, be entitled on the basis of a power of attorney. Below the signature, in addition to
the full name of the person that signs his/her position must be inserted. When one of the Parties
who signs is a natural person (for example a commercial agent in an Agency Contract) obviously
he or she is the person that has to sign the contract.
The laws of some countries require that contracts, to be valid, shall be signed in front of
witnesses or a public notary. Therefore, before signing a contract you should be informed about
the requirements that may exist in each country.
Place and date of signature
Usually contracts are signed by both Parties on the same date and place. Nevertheless, in
international contracts, due to physical distance, it is common that each of the Parties sign in
different dates and places. This contract provides for both alternatives so it comes to choosing
the most appropriate to each situation.
Number of copies
Usually, the Parties sign two copies of the contract, each Party retaining one of them, but cal
also arise the need to sign more copies. In this case all you have to do is mention explicitly the
number of copies to be signed in the paragraph that is included at the end of the contract (Both
Parties declare their conformity to the present contract, which is signed in …… copies, each of
which shall be considered an original).
GENERAL RECOMMENDATIONS
The Parties must sign all pages of the contract, including Annexes, so they are also valid. It is
better to use ball point or pen (not pencil) in a color other than black (e.g.: blue); this makes it
easier to distinguish an original document from a photocopy.
It is preferable (although no mandatory) to express sums of money and percentages in words
and figures. Of course, the words and figures for a given amount must match exactly. You also
must insert the currency in which the amounts are expressed. It is advisable to use the rules
establish by ISO that name each currency by three capital letters (EUR for euro, USD for dollar,
GBP for sterling pound, JPY for Japanese yen, etc. – you can get the acronyms of every currency
in the website www.oanda.com).
Once you have chosen the best alternatives of each clause and have completed the blank spaces
you should revise the whole contract to remove remaining paragraphs and correct any errors.