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How do joint ventures and partnerships differ?

On Behalf of | Nov 30, 2022 | Business & Commercial Law

If you want to begin a joint business journey together with another entrepreneur, you may automatically think that you want to start a business partnership. However, depending on numerous factors, you might actually find that a joint venture suits your purpose better.

Understanding the differences between joint ventures and business partnerships will allow you to prioritize your goals and further your company.

Defining joint ventures and partnerships

Chron talks about the differences between joint ventures and partnerships. Joint ventures allow two parties to work together on a certain project. When this project is over, the venture will end. With partnerships, the business ties will continue indefinitely, lasting through ongoing or multiple work projects.

Freedom within a business

With partnerships, it requires all members involved to work together in a single business structure. On the other hand, joint ventures do not give up any independence they have as separate business entities. Entering a joint venture will not alter a business structure.

The lifespan of a contract

Joint ventures also have a varied lifespan. Some may last for a year or less, while others could last for five or more. It all depends on the project that the parties are working on and its scope. On the other hand, partnership contracts typically do not have an associated time limit. Conditions to dissolve one generally rely on things like a buyout or the death of one of the involved partners.

However, pay attention to the contract language in a joint venture. Be sure that it does not force too much forfeiture of control or revenue, and that it does not create a liability exposure risk.