A joint venture agreement is a document used when a company plans to partner with a second party to develop a new product, business, or service option. The document contains the objectives of both parties, each partner's contribution, the purpose of their relationship, and provides a foundation for their new business venture with a time-line of the venture. The agreement includes the rights and responsibilities of the parties and what activities are discouraged.
One important feature of the document is how profits and losses will be split between the two parties, so both parties are aware of their partner's obligations. A solid agreement covers ownership, intellectual property rights, taxes and confidentiality. If the joint venture involves the formation of new business, the agreement may specify lists of board of directors, committees, and other individuals trusted to manage the direction of the venture.
A joint venture agreement also contains information on how to handle termination. If a joint venture between the two parties were to fail, the agreement would specify proper methods of termination and dissolution. The agreement is the number one way to protect both partners' interests. Notable examples of this arrangement include Sony-Ericsson and MillersCoors.